Standard Costing - What it is and Why it Matters- Explained with Audio скачать в хорошем качестве

Standard Costing - What it is and Why it Matters- Explained with Audio

Standard costing is the practice of estimating the expense of a production process. It's a branch of cost accounting used by a manufacturer, for example, to plan their costs for the coming year on various expenses such as direct material, direct labor, or overhead. Some manufacturers allocate the anticipated or standard costs rather than the actual costs of direct materials, direct labor, and manufacturing overhead to a product. This implies that a manufacturer will start with inventories and cost of goods sold that reflect standard costs rather than the actual costs of a product. There are almost always differences between the actual and standard costs, and the differences are noted as variances, as a manufacturer must pay its suppliers and employees the actual costs. These manufacturers will also compare the standard cost to the actual costs. The difference between the standard and actual costs is known as a variance. The variance indicates a deviation from what was recorded in the profit plan. Management can likely anticipate a lower profit if actual costs exceed the standard. However, if actual costs are less than standard, management might anticipate a higher profit than initially planned. Standard costing is a tool that can be used in financial accounting to track actual costs against a budget. Standard costing assigns specific costs to specific activities, then compares those activities' actual costs to the budgeted cost. This comparison helps businesses identify areas where they are overspending or under-spending and then take steps to correct those issues. A cost system is a tool that helps managers understand where their money is going and make informed decisions about allocating resources. If a company uses a costing system that doesn't accurately reflect the actual cost of their products, they may set prices that are too high or too low- leading to lost sales and profits. Standard costs can also be thought of as: Planned costs Expected costs Budgeted costs "Should be" costs Benchmark costs Article Sections: Standard Costing- What Is It, Why It Matters WHAT IS THE PURPOSE OF STANDARD COST? Why do standard costs matter? Standard Costing When did standard costing first get developed? How does standard costing help a company achieve its goals? Application of Standard Costing What Leads to an Inaccurate Standard Costing? The Impact of Bad Standards on the Financial Statements How Standard Costs Lead To Poor Decision-Making Standard Costing- Frequently Asked Questions Standard Costing- What Is It, Why It Matters- Recommended Reading https://benjaminwann.com/blog/standar...