Question

What type of manufacturers would use standard costing and what type most likely would not?

Answer 1

Answer-Rather than assigning actual costs of direct material, direct labor and manufacturing overhead to a product, which can be costly and time consuming, manufacturers can use standard costing to reveal variances between the expected and actual costs.Standard costing is associated with a manufacturing company.If a company deals with custom products, then it uses standard costs to compile the projected cost of a customer’s requirements, after which it adds a margin.

Though most companies do not use standard costing in its original application of calculating the cost of ending inventory, it is still useful for a number of other applications