Applications of Standard Costing

Standard costing is quite useful to the management in its function say planning, controlling etc and most important in decision making and performance evaluation. Standard costing can be used for:

• Projecting the profit level of the business at any level of production.
• To help in execution of management’s functioned effectively i.e. planning and controlling of cost.
• To analyze the impact of cost if sales volume increase/decrease by certain percentage.
• To measure the efficiency of production.
• To measure the performance of each segment.
• To identify and measurement of variances between standards and actuals.
• To design performance measurement systems to encourage employees to participate for the betterment of the Organization.