Everything you need to know about standard costing. Standard costing is a technique of cost control. The CIMA Official Terminology defines it as "a control technique which compares standard costs and revenues with actual results to obtain variances which are used to stimulate improved performance." Standard cost is a planned cost for a unit of product, component or service produced [...]
In this article we will discuss about:- 1. Introduction to Standard Costing 2. Purposes and Advantages of a Standard Costing System 3. Limitations 4. Setting Standard Costs 5. Standard Hour- Variance Ratios 6. Standard Cost Book Keeping 7. Summary. Standard Costing: Introduction , Advantages, Formula and Example! Introduction to Standard Costing: Standard costing system is not a distinct system of accounting. [...]
Variance refers to the difference between planned and actual performance. Planned performance may be quantified in budget or actual performance. Planned performance may be quantified in budget or expressed as standard costs or any other statement. Thus, variance is a general term and not specific to the standard costing system. Variance Accounting: It is defined as 'A technique whereby the [...]