Standard Costs for Product Costing Research Paper

Standard Costs for Product Costing - Research Paper ExampleIt is a exist accounting method that is designed to determine appropriate cost of a product under current production circumstances. The definition of standard cost presumptuousness by Chartered Institute of Management Accountants (CIMA) UK is that, it is a predetermined cost which is calculated from managements standards of efficient operations and the relevant necessary expenditure. to a greater extent simply, a standard cost is a planned cost for a unit of product or service produced under certain circumstances. The final strain of the standard costing method involves comparison of the predetermined/standard costs to the actual costs (which can only be established after the production) and a stochastic variable between the two costs enables the management to take required corrective action as suited regarding the manufacturing process.Thereby standard costing presents legion(predicate) obvious advantages to a manufactu ring business like of Johnstown Division. Listed below are some of the most prominent advantages that have been identified in the past literature.2. Finding of variance The variance determined by comparison of actual verses standard costs indicates areas in the business process e.g. production-line with inefficiencies. It promotes corrective measures at the earliest and thereby positive checks on various expenditures (Dosch & Wilson, 2010).5. Right decisions It enables and generates useful information for the management in taking important decisions. E.g. regarding purchase price inflations, employee incentive schemes, product pricing, etc. (Michael, 2011) contempt of these benefits, literature claims that shorter life cycles of products, new advanced manufacturing technologies, lesser importance of labor in the manufacturing process, and globalized competition has potential to cause expiration of standard costing (Sulaiman et al., 2005). A significant addition to the debate whethe r to encourage the use of standard costing is the research by Zoysa et al, in 2007. It