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  • ACC4213 Self Learning Week7

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    Amanda Alan
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    Standard costs help managers focus on important issues that require attention by establishing benchmarks to compare actual costs. They promote economy and efficiency when employees view the standards as reasonable and use them to judge performance. Standard costs also greatly simplify accounting and bookkeeping by allowing standard costs to be charged to jobs rather than recording actual costs for each one.

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    Standard costs help managers focus on important issues that require attention by establishing benchmarks to compare actual costs. They promote economy and efficiency when employees view the standards as reasonable and use them to judge performance. Standard costs also greatly simplify accounting and bookkeeping by allowing standard costs to be charged to jobs rather than recording actual costs for each one.

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    10 views1 page

    ACC4213 Self Learning Week7

    Uploaded by

    Amanda Alan
    Standard costs help managers focus on important issues that require attention by establishing benchmarks to compare actual costs. They promote economy and efficiency when employees view the standards as reasonable and use them to judge performance. Standard costs also greatly simplify accounting and bookkeeping by allowing standard costs to be charged to jobs rather than recording actual costs for each one.

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    of 1

    1.

    Helps in Management

    The use of standard costs is a key elemental 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. Promote Economy and Efficiency

    Standards that are viewed as reasonable by employees can promote economy and
    efficiency. They provide benchmarks that individuals can use to judge their
    performance.

    3. Greatly Simplify Accounting and Bookkeeping

    Standard costs can greatly simplify bookkeeping. Instead of actual recording costs for
    each job, the standard costs for materials, labor, and overhead can be charged to jobs.

    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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