Page 10 - Manac Costing Test 2 class slides - 1. Standard Costing
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STANDARD COSTING
Purpose of standard costing
• Providing a prediction of future costs that can be used
for decision-making purposes.
• Providing a challenging target which individuals are
motivated to achieve
• Assisting in setting budgets and evaluating managerial
performance
• Acting as a control device by highlighting those
activities which do not conform to plan and thus
alerting managers to those situations that may be ‘out
of control’ and in need of corrective action
• Simplifying the task of tracing costs to products for
profit measurement and inventory valuation purposes.
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