Advantages of Standard Costing:

It serves as a basis for measuring operating performance and cost control. By setting
standards, proper classification and determination of variances, is possible. This serves as a
signal for prompt corrective action. This system provides for reporting on the principle of
exception. The basis of this principle is that only matters which are not proceeding according
to plan are reported upon. This enables the managers to concentrate upon essential matters
and leave the non-essentials to take care of themselves. By using special forms, any
excessive time taken, extra material used or additional services consumed can be brought to
light as part of the ordinary routine. In other words, if the variances are negligible, it means
that the performance is more or less in accordance with the standards. Significant variances
which warrant the attention of the manager are brought to his knowledge.