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  • Paraphrased Mco5

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    Rishabh Jain
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    Standard costing is a costing method that compares estimated standard costs to actual costs incurred to calculate variances and identify reasons for deviations. This allows manufacturers to plan costs for expenses like materials, labor, and overhead. Variances show differences between standard and actual costs, so manufacturers can see if costs were higher or lower than planned and then take actions to improve profitability.

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    Standard costing is a costing method that compares estimated standard costs to actual costs incurred to calculate variances and identify reasons for deviations. This allows manufacturers to plan costs for expenses like materials, labor, and overhead. Variances show differences between standard and actual costs, so manufacturers can see if costs were higher or lower than planned and then take actions to improve profitability.

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    11 views1 page

    Paraphrased Mco5

    Uploaded by

    Rishabh Jain
    Standard costing is a costing method that compares estimated standard costs to actual costs incurred to calculate variances and identify reasons for deviations. This allows manufacturers to plan costs for expenses like materials, labor, and overhead. Variances show differences between standard and actual costs, so manufacturers can see if costs were higher or lower than planned and then take actions to improve profitability.

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    Q4(a)

    Standard Costing is a costing method, that is used to compare the standard costs and revenues with the actual results,
    in order to arrive at the variances along with its causes, to inform the manufacturer about the deviations and take
    corrective measures, for its improvement. This is a practice of estimating the expense of a production process. A
    manufacturer can use standard costing to plan their costs for the coming year on various expenses such as direct
    material, direct labor or overhead. The manufacturer can compare the standard costs to the actual costs and the
    difference b/w the two is called variance. Variance indicates that there is a deviation from what was recorded in the
    profit plan. If standard costs are higher than actual costs, the manufacturer can expect higher profit. If standard costs
    are lower than the actual costs, the manufacturer can expect lower profits and thus take measures to improve.

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