Question

List 5 key points related to Standard Costing

Answer 1

1. Standard costing refers to the calculation of cost that should be incurred for the production of the goods. Standard cost can be calculated on the basis of the recent actual cost. Or any other viable method.

2. Standard cost provides for the calculation of variances from the actual product. Hence, it helps in having a check on the actual cost.

3. Standard costing is very helpful in case of budgeting, Price formulations , Inventory costing etc.

4. Standard cost is needs to revised from time to time , to adjust it according to the current trend of prices, technology, inflation etc.

5. Standard costing is used in decision making process.