What do you mean by standard costing? Explain its uses and limitations.
Answers
Answered by
0
Definition of Standard Costing:
The word ‘standard’ means a benchmark or yardstick. The standard cost is a predetermined or expected cost, which determines what each product or service should cost under given conditions. In other words it is the expected cost of producing one unit. 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
The word ‘standard’ means a benchmark or yardstick. The standard cost is a predetermined or expected cost, which determines what each product or service should cost under given conditions. In other words it is the expected cost of producing one unit. 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
Similar questions