Standard Costing – Know The Advantages, Types And Differences With Actual Costing



Usually companies use standard costing to find out how much the costs incurred in production. Of course this will help reduce production wastage and can also achieve more profits.

In general, the term standard cost is a standard cost that has been determined in advance and should be issued to finance operational activities.

The principle of accountability is needed in this case, especially in recording costs. In fact, in cost accounting itself, standard costing is used to control costs and record production costs by standard and actual costs.

The goal is to compare the two costs, so that it can be analyzed whether there is a deviation or not. If standard costing deviations occur in production, then analysis of variance or difference is carried out.

Definition of Standard Costing (Standard Cost)

Standard costing is a way to compare expected costs with actual costs in the accounting records.


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