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.