Standard Costing
TERM PAPER
STANDARD COSTING
MANAGEMENT ACCOUNTING & CONTROL SYSTEM Srinidhi Rangarajan 1PB11MBA34 3rd SEM M.B.A PESIT ABSTRACT
In recent years, numerous tools such as activity-based costing, the balanced score card and target costing have gained prominence in the business community. Nonetheless, traditional management accounting continues to be prevalent in practice. One example is standard costing, which has been used on a wide front during the last century.
Standard costing is used by Customers who employ predetermined costs for valuing inventory and for charging material, resource, overhead, period close, and job close and schedule complete transactions. Differences between standard costs and actual costs are recorded as variances. Manufacturing industries typically use standard costing. Costs of items can be shared across organizations using standard costing. A note on the same has been provided in this paper. An attempt has been made to understand the way in which costs are built up for a manufactured item through this paper. The objectives of the paper are: * To understand the meaning of standard costing, its meaning and definition * To learn its advantages and limitations * To learn how to set of standards and determinations * To learn how to revise standards
KEY WORDS: i. Standard cost ii. Standard time iii. Actual time
INTRODUCTION
It is a known fact that management accounting is managing a business through accounting information. In this process, management accounting is facilitating managerial control. It can also be applied to one’s own daily/monthly expenses, if necessary. These measures should be applied correctly so that performance takes place according to plans. Planning is the first tool for
STANDARD COSTING
MANAGEMENT ACCOUNTING & CONTROL SYSTEM Srinidhi Rangarajan 1PB11MBA34 3rd SEM M.B.A PESIT ABSTRACT
In recent years, numerous tools such as activity-based costing, the balanced score card and target costing have gained prominence in the business community. Nonetheless, traditional management accounting continues to be prevalent in practice. One example is standard costing, which has been used on a wide front during the last century.
Standard costing is used by Customers who employ predetermined costs for valuing inventory and for charging material, resource, overhead, period close, and job close and schedule complete transactions. Differences between standard costs and actual costs are recorded as variances. Manufacturing industries typically use standard costing. Costs of items can be shared across organizations using standard costing. A note on the same has been provided in this paper. An attempt has been made to understand the way in which costs are built up for a manufactured item through this paper. The objectives of the paper are: * To understand the meaning of standard costing, its meaning and definition * To learn its advantages and limitations * To learn how to set of standards and determinations * To learn how to revise standards
KEY WORDS: i. Standard cost ii. Standard time iii. Actual time
INTRODUCTION
It is a known fact that management accounting is managing a business through accounting information. In this process, management accounting is facilitating managerial control. It can also be applied to one’s own daily/monthly expenses, if necessary. These measures should be applied correctly so that performance takes place according to plans. Planning is the first tool for
References: 1. Google.com 2. Wikipedia.com 3. Standard costing by Jain and Narang 4. Management accounting by Reddy Appanaiah 5. Website of SKP company 6. Financial dictionary