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Pooja, Lovely Professional University Unit 10: Standard Costing
Unit 10: Standard Costing Notes
CONTENTS
Objectives
Introduction
10.1 Meaning of Standard Costing
10.2 Budgetary Control and Standard Costing
10.3 Estimated Costing
10.4 Standard Costing as a Management Tool
10.5 Limitations of Standard Costing
10.6 Determination of Standard Cost
10.7 Standard Cost Sheet
10.8 Summary
10.9 Keywords
10.10 Self Assessment
10.11 Review Questions
10.12 Further Readings
Objectives
After studying this unit, you will be able to:
Explain the meaning of standard costing
Describe budgetary control and standard costing
Define estimated costing
Discuss the standard costing as a management tool and limitations of standard costing
Illustrate the determination of standard cost and cost sheet
Introduction
Standard costing is a tool, which replaces the bottleneck of the historical costing. Historical
costing is one of the tools, which fulfills the one of the objectives of costing i.e. ascertainment of
costs. The cost of a product can be ascertained only after the production of a product; which is
meant as “Historical costing”.
Why standard costing is considered to be more important than the Historical Costing?
Historical costing facilitates to ascertain the cost of a product which is connected with yester
operations or with past. The ultimate aim of studying this unit is to control the cost of a product
as one among the objectives of cost effectiveness strategy of the business enterprise.
LOVELY PROFESSIONAL UNIVERSITY 209
