std. costing

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August 19, 2020 at 1:40 pm #581187
Noah098
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An accurate definition of standard costing is a system of budgeting where:
a) output level and costs are predetermined, actual results then compared with these predetermined costs and variances analysed.
b)actual costs are compared with predetermined costs for the level of activity
sir, its again an MCQ question. no explanation is provided as to why ‘a’ statement is wrong. The right answer is ‘b’
August 19, 2020 at 3:03 pm #581198
John Moffat
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As I explain in my lectures, we do not calculate variances by comparing the actual results with the originally budgeted costs. We compare actual results with the flexed budget costs i.e. the standard costs for the actual level of activity.
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