Page 224 - DMGT403_ACCOUNTING_FOR_MANAGERS

Unit 10: Standard Costing

11. Why the given standards are tuned to actual? Notes
(a) To equate both of them
(b) To convert the standards at par with the actual performance
(c) To know the difference

(d) None of the above

10.11 Review Questions

1. Standard costing is a tool, which replaces the bottleneck of the historical costing. Give
some suggestions to support the above statement.

2. The organisations can increase their profit either by increasing the selling price of their
products or by reducing the cost of the product. Which strategy is more beneficial for the
organisation?
3. Standard is nothing but an expected or anticipated performance in normal situations. Do
you think the process of setting the revenue standards is same as the cost standards?
4. The budgetary control and standard costing systems are said to be inter-related but they
are not inter-dependent. Discuss.

5. How standard costing is a useful managerial tool for cost control and cost reduction?
6. Prepare a standard cost sheet for any product or service and discuss the key elements.
7. The management may certainly fix standards on the basis of maximum possible efficiency,
possibly with an assumption of no wastage, no idle time, etc. Do you think this is realistic?
8. As 'standard' is a relative expression; one has to determine for oneself what one deems
appropriate as a 'standard'. Discuss.

9. Suggest some drawbacks of standard costing.
10. Standard costs and estimated costs are predetermined costs, but their objectives are different.
What are the key points of differences between standard cost and estimated cost?

Answers: Self Assessment

1. Historical costing 2. Revenue standards

3. Budgetary control 4. past performance
5. variances 6. realistic
7. standard cost sheet 8. (d)
9. (a) 10. (d)

11. (b)

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