Standard Costing
From Wikireedia
Why?
- A standard measurement - measurable - i.e variances
- Too cumbersome to find out actual costs for product
- To generate valuations
- To aid decisions
- To help set budgets
Standards are based on historic/reducted cost records, labor and overhead expenditures
- Basic Standard Costs are not changed for long periods - allows comparison over years, (inflation? changes to product content, methods of operation)
- Ideal Standards Costs - Standards based upon the most favourable conditions
- Attainable - assuming avoidable down times, etc
Standard marginal costing or absorpton costing
Full standard costing is easier yet it disguises the control of Fixed Cost and is based upon budgeted levels of production that may not actually be met