1) A standard costing system provides a yard stick against which actual costs can be compared.
2) Analysis of variances as part of ordinary accounting routine ensures that regular checks are
placed upon expenditure incurred.
3) Setting standards requires a detailed study of all manufacturing administration, selling and
distribution functions so that they may be made efficient. This result in improved methods
being adopted with resultant lower costs.
4) Useful information regarding operations is made available to management on a regular basis.
5) Once these standards are set they can be used as a motivating factor to employees by
employing an incentive system based on performance.
6) Production and price policies can be formulated with certainty before production takes place.
7) Standards assist in making decisions regarding whether to make or buy a certain product or to
continue or close down department.
8) There are greater definition responsibilities.
marto answered the question on February 26, 2019 at 08:59
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