Standard costing introduction

One of the fundamental functions of management accounting is facilitating managerial control.
   Standard costing is a technique which helps management to control costs and business operations. It aims at eliminating wastes and increase efficiency in performance through setting up standards or formulating cost plans.

MEANING OF STANDARD COSTING
     The word 'standard' means a bench-mark or yardstick. The standard cost is a predetermined cost which determines in advance what each product or service should cost under given circumstances.

STEPS INVOLVED IN STANDARD COSTING

• The determination of standard cost.
• The recording of actual cost.
• The comparison between standard cost and actual cost.
• The finding out of variance.
• The reporting of variance so as to find out inefficiency and take necessary corrective measures.