Standard costing

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Standard costing

  1. 1. Standard Costing<br />Sujoykrpaul<br />Assam University,silchar<br />
  2. 2. Specialized technique of costing for cost control,<br />Provides yardsticks or norms;<br />Std. is fixed, compare & analyzed for reasons;<br />Responsibility is fixed on each variance,<br />Corrective measures are taken accordingly<br />
  3. 3. useful<br />Decision making<br />Production planning, <br />Policy formulation,<br />Proper Budgeting <br />Feedback system<br />
  4. 4. Advantages<br />Formulation of price & Production policies,<br />Measuring efficiency<br />Elimination of wastage & efficiency<br />Cost consciousness<br />Better capacity to anticipate<br />Management by exceptions <br />
  5. 5. Advantages over Historical<br />
  6. 6. Standard costing & Budgetary Control<br />
  7. 7. Limitations<br />Costly as need the periodic revision<br />Need high technical skill<br />Correct standard are rarely made<br />Some Industries demand frequent revision(technological)<br />Applicable for specific industries (production takes place >1yr) <br />
  8. 8. Variance Analysis(What should be the cost?)<br />Process of analyzing variance,<br />Difference between actual & standard,<br />Cost reduction<br />Efficient use of material & labor<br />Favorable Variance(Profit/efficiency) & Unfavorable variance (Loss/inefficiency)<br />
  9. 9.
  10. 10. Purpose of variance<br />Provide practical pointers to the causes of off-standard performance,<br />Must fulfill the need of the org.<br />Calculation is useful,<br />
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