Standard costing is a specialized costing technique used for cost control that establishes predetermined costs known as standards that are used as benchmarks to measure performance and control costs. Variances between actual and standard costs are analyzed to identify reasons for differences and assign responsibility so corrective measures can be taken. Standard costing is useful for decision making, production planning, policy formulation, and proper budgeting as it provides feedback on performance.

1. Standard CostingSujoykrpaulAssam University,silchar

2. Specialized technique of costing for cost control,Provides yardsticks or norms;Std. is fixed, compare & analyzed for reasons;Responsibility is fixed on each variance,Corrective measures are taken accordingly

3. usefulDecision makingProduction planning, Policy formulation,Proper Budgeting Feedback system

4. AdvantagesFormulation of price & Production policies,Measuring efficiencyElimination of wastage & efficiencyCost consciousnessBetter capacity to anticipateManagement by exceptions

5. Advantages over Historical

6. Standard costing & Budgetary Control

7. LimitationsCostly as need the periodic revisionNeed high technical skillCorrect standard are rarely madeSome Industries demand frequent revision(technological)Applicable for specific industries (production takes place >1yr)

8. Variance Analysis(What should be the cost?)Process of analyzing variance,Difference between actual & standard,Cost reductionEfficient use of material & laborFavorable Variance(Profit/efficiency) & Unfavorable variance (Loss/inefficiency)

10. Purpose of varianceProvide practical pointers to the causes of off-standard performance,Must fulfill the need of the org.Calculation is useful,