Page 97 - 5.2 i. Manac Costing ITC Summarised Notes
P. 97
STANDARD COSTING
Introduction
• Standard costing is a financial control system that analyses
deviations from budget in detail in order to control future costs
and forms part of the process of management by exception.
• Standards are predetermined target costs and selling prices which
represent a benchmark that should be achieved under normal
conditions.
• Standard costs are the expected or budgeted costs for producing
a single unit of a product or a service.
• Quantity standards and cost (price) standards are set for the
materials, labour and overheads consumed in producing a unit of
the product.
• In order to apply standard costing, standardised tasks or
repetitive operations must be involved for which a standard time
or quantity and cost can be determined.
97
