What are the advantages of standard costing?

What are the advantages of standard costing?

- It provides a yardstick for measuring the efficiency or inefficiency in performance.

- It facilitates the basic management function of cost control.

- It sets a standard which needs greater effort and motivation to work to achieve the same.

- It can be used as a basis for price fixation, filing the tenders and offering the quotation.

- It facilitates delegation of authority and fixation of responsibility for each individual or department.

- To take the corrective measures, the management needs to measure the variance from the standard.

- It provides means to encourage actions to reduce cost.

- A proper laid down system of standard costing facilitates the correct implementation of budgetary control technique.
What are the limitations of standard costing?
Practically it is difficult to establish standard costing, Frequent revision of standards is costly…
Compare Budgetary Control & Standard Costing.
Budgetary Control is the limit on the expenditure above which expenses should not exceed whereas Standard Costing…
What are the stages involved in setting standard cost for Direct material cost and Direct labour cost ?
Direct material cost: Setting the standard cost for direct material involves two stages…
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