Standard Costing

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Standard costs also known as regular costs are generalized with the concept in which the cost replaced at the date of valuation. As most of the companies fixed certain benchmark of the performance of the product and while determining certain standards raised for the products if any discrepancies in future cost production or any cost of replacing an asset is occurred. The standard costs are notionalised with the changing price levels and the standard cost must be adjusted to reflect current or future price levels.

Though, in actual costing method that gives an accurate price structure but it does not predict the budgeted information of the expenses involve. While standard costing gives the general price of the expenses though which is not available in the actual costing method to create the funds and manage the decisions. Thus, for most companies, formulating actual costing method is not considered.

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