Choose the correct answer The technique of standard costing may not be applicable in the case of

Step 1: Understand the concept of standard costing. Standard costing is an accounting technique

Choose the correct answer The technique of standard costing...

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Key Concepts

Standard Costing

Standard costing is a cost accounting technique that involves assigning pre-determined costs to products or services. It establishes cost benchmarks and is primarily used for cost control, budgeting, and performance evaluation by comparing actual costs with these established standards.

Variance Analysis

Variance analysis is an integral part of standard costing, where the differences between the standard and actual costs (variances) are identified and analyzed. This process helps management pinpoint areas of inefficiency or cost overruns and take corrective actions.

Applicability Considerations

The efficacy of the standard costing technique depends on the nature and stability of the production or service environment. It is best suited to operations where costs can be reliably predicted and standardized, typically in larger, more structured manufacturing settings. In contrast, in smaller or highly variable operations, such as certain service sectors or small concerns, the technique may be less applicable due to the difficulty in establishing consistent standards.

Choose the correct answer The technique of standard costing may not be applicable in the case of (a) Large concerns (b) Small concerns (c) Transport (d) Education

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