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ADVANTAGES OF STANDARD COSTING

The use of standard costing is widespread in the manufacturing industry because of several advantages:

a) Standard coats provide a very useful tool in measuring the performance of one company and it
helps management in their planning activities.
b) The resulting variances after comparing the actual performance and standard set by the
company provide a means of giving rewards to deserving employees based on performance
evaluation.
c) The use of standard costs helps production managers highlight variances in management by
exception.
d) Its easier to use than actual or normal costing because costing of inventories and cost of sales is
simplified.