Question

Explain the advantages and limitations of standard costing

Answer 1

Answer:

It is, in effect, a budget for one unit. Standard costing may be defined basically as a technique of cost accounting, which compares the standard cost of each product or service with the actual cost to determine the efficiency of operation so that remedial action may be taken immediately.

Explanation:

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Answer 2

Answer:

Compiling standard costs more carefully can eliminate the weakness of the traditional costing system. 2. Standard costs can be used as a yardstick against which actual costs can be compared. ... Variance analysis helps management to have regular as well as better checks over costs incurred.

A standard cost system can be valuable for top management in planning and decision making. More reasonable and easier inventory measurements A standard cost system provides easier inventory valuation than an actual cost system. Under an actual cost system, unit costs for batches of identical products may differ widely.