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    JL Favorito Yambao
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    Standard costs provide benchmarks that help managers focus only on significant variances, promote efficiency when standards are reasonable to employees, and simplify bookkeeping. Managers are alerted to potential problems when costs fall outside standards, employees can judge their performance against standards, and responsibility is established for meeting standard costs.

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    Standard costs provide benchmarks that help managers focus only on significant variances, promote efficiency when standards are reasonable to employees, and simplify bookkeeping. Managers are alerted to potential problems when costs fall outside standards, employees can judge their performance against standards, and responsibility is established for meeting standard costs.

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    4 views1 page

    KJKH

    Uploaded by

    JL Favorito Yambao
    Standard costs provide benchmarks that help managers focus only on significant variances, promote efficiency when standards are reasonable to employees, and simplify bookkeeping. Managers are alerted to potential problems when costs fall outside standards, employees can judge their performance against standards, and responsibility is established for meeting standard costs.

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    1. The use of standard costs is a key element in a management by exception approach.

    If costs remain within the standards, Managers can focus on other issues. When costs fall significantly outside the standards, managers are alerted that there may be problems requiring attention. This approach helps managers focus on important issues. 2. Standards that are viewed as reasonable by employees can promote economy and efficiency. They provide benchmarks that individuals can use to judge their own performance. 3. Standard costs can greatly simplify bookkeeping. Instead of recording actual co0sts for each job, the standard costs for materials, labor, and overhead can be charged to jobs. 4. Standard costs fit naturally in an integrated system of responsibility accounting. The standards establish what costs should be, who should be responsible for them, and what actual costs are under control.

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