Standard costing - Advantages Flashcards
1
Q
What are the advantages of standard costing?
A
Price-setting
Other decision making
Planning
Controlling costs
2
Q
Price-setting
A
Allows a mark-up to be added to the cost of producing each unit
3
Q
Other decision making
A
Assists with decisions relating to break-even analysis, make-or-buy decisions and whether to accept additional work at lower prices
4
Q
Planning
A
Assists decisions relating to the quantity and cost of resources such as materials
5
Q
Controlling costs
A
Standard costs can be compared with actual costs so the changes can be made
6
Q
What does standard costing mean
A
It means calculating budgeted costs for materials, labour and overheads before production takes place.
