STANDARD COSTING

Standard costing is a technique which was uses standard for costs and revenues for the purpose of control through variance analysis.It is not a  method or distinct system of accounting, but can be added to an existing costing method.

Here we have to predetermined to standard cost i.e how much costs should be under specified working conditions.It is built up from the assessment of the value of the cost elements .The main purpose of standard costs are to provide bases for control through variance analysis as well as provide bases of stock and work in progress and in some cases for fixing the selling price.

Standard costs are predetermined that is,before production commences, so that expenditure can be controlled during the production it self.It is yardstick for measuring the performance against standard.It can be used as an aid to budgeting.

Standard costing provides and opportunity for continuous reappraisal of the methods of production,use of material leading cost reduction and establishing new standards.

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