List various stages in the process of standard costing.

List various stages in the process of standard costing.

The process of Standard Costing involves the following stages:

- Predetermination of technical data related to production i.e details of material and labour required for the manufacturing process.

- Predetermination of standard costs under each element of cost i.e material, labour, overhead.

- Comparison of actual results with the standard costs to find out the variances.

- Analysis of variances to find out the reasons for deviations of actual results from the standards.

- Presentation of information to the level of management to take the appropriate action, or revision of standards.

What are the pre-requisites to set up a standard costing system?

- Cost centre should be defined very clearly in order to fix the responsibilities of every individual or department.

- Accounts should be designed in such a way, whenever the information about the actual performance is required; it is available as correctly and speedily as possible.

- Establish the standards with respect to the individual elements of cost.
What are the advantages of standard costing?
It provides a yardstick for measuring the efficiency or inefficiency in performance….
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…
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