In accounting, a standard costing system is a tool for planning budgets, managing and controlling costs, and evaluating cost management performance. A standard costing system involves estimating the required costs of a production process.

In which industries standard costing system is more widely applied?

Standard costing is technique which is more useful in manufacturing industries. Bricks, cement, fertilizers, sugar etc are the type of industries in which standard costing is more useful. Its a valuable tool to have cost control.

What is basic standard in cost accounting?

Basic Standards: The Chartered Institute of Management Accountants (UK) defines a basic standard as the standard which is established for use unaltered for an indefinite period which may be a long period of time. Basic standards are seldom revised or updated to reflect current operating costs and price level changes.

What are two main uses of standard costing?

Five of the benefits that result from a business using a standard cost system are:

• Improved cost control.
• More useful information for managerial planning and decision making.
• More reasonable and easier inventory measurements.
• Cost savings in record-keeping.
• Possible reductions in production costs.

  How is budgetary control not dependent on standard costing?

  Budgetary control is exercised by statistically putting the budgets and actuals side by side. Variances are not revealed through the accounts. But under the Standard Costing system, actuals are recorded in accounts and thus the variances are revealed through different accounts.

  What is the main basis of setting standards?

  There are chiefly four basis for setting standards: (i) Quantity, (ii) Quality, (iii) Time, and (iv) Cost. Quantity Standards are related to production, sales, stock, etc.

  Is there any relationship of standard costing with budgetary control?

  Standard Costing System: Standard costing is related to production and production costs. Hence, it is more rigorous and intensive. Standard costing system cannot operate well without a budgetary control system. It is also not possible to operate the system in parts.

  What are the basic difference between budgetary control and standard costing?

  Differences between Standard Costing & Budgetary Control

  Standard Costing	Budgetary Control
  1. It is concerned with control of costs or expenses.	1. It is concerned with the operation of business without interruption.
  2. It is the projection of cost accounts.	2. It is a projection of financial accounts.