Standard costs are pre-determined by using a careful analysis of production methods, physical
conditions and price factors. They represent achievable targets and help to build up budgets,
gauge performance and obtain product costs. The actual costs will vary from month to month
or even from day to day. The basic objective, therefore, of standard costing system is to
assist the departmental head by identifying and describing the variances over which he has
control. Thus, a set of standards developed under the standard costing system outlines how a
task must be accomplished and how much it should cost. As work is done actual costs are
recorded and compared with standard cost to determine the variances.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment