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\u00a0<\/span><\/b><\/p>\n Standard costing is pre-determined cost. <\/span><\/p>\n It is determined in advance of production like cost of materials, wages or labour, overheads etc. <\/span><\/p>\n It is a management accounting tools for management control. <\/span><\/p>\n It is applied to compare the actual cost with variance. <\/span><\/p>\n It is used for following process:<\/span><\/p>\n Establishment of standard cost<\/span><\/p>\n To find out actual cost<\/span><\/p>\n To compare and measurement of variance <\/span><\/p>\n Analysis of variances<\/span><\/p>\n Reporting to related center for taking action<\/span><\/p>\n \u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n In a manufacturing company, materials and labour are the most important factors<\/span> for production<\/span>. <\/span><\/p>\n Raw materials are converted into semi-finished goods and finished goods with the help of labour.<\/span><\/p>\n While manufacturing the goods, all the input goods are NOT output or yield.<\/span><\/p>\n There are normal and abnormal losses. <\/span><\/p>\n \u00a0<\/span><\/p>\n When the company cannot stop or control the loss of goods on a natural basis; it is called normal loss. <\/span><\/p>\n Normal losses are weight loss, shrinkage, evaporation, rust etc. <\/span><\/p>\n When the company can stop or control loss but could not control, it is known as abnormal loss.<\/span><\/p>\n Abnormal loss is due to carelessness, fatigue, rough handling, abnormal or bad working condition, lack of proper knowledge, low-quality raw materials, machine break down, accidents etc. <\/span><\/p>\nStandard Costing <\/span><\/b><\/h2>\n
Materials<\/span><\/b><\/b><\/h3>\n