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Discuss the use of standard costing in controlling cost.

Discuss the use of standard costing in controlling cost.

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Answer #1

Answer:

Objective of using Standard Costing System in controlling cost

  • To control costs mainly by setting standards for each type of cost incurred material, labour and overhead.
  • It also help in analysing Variances and hence judging the effectiveness of managers in controlling cost which they are held responsible.
  • It is a tool for planning budgets, managing and controlling costs and evaluating cost management performance.
  • To assign per unit cost to production
  • To measure and evaluate the use of production capacity with respect to the incurrence of fixed overhead cost.
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