STANDARD COST: Standard costs are predetermined costs. It is a determination in advance of production , of what should be the cost.

DEFINITION: According to ICMA , Standard cost is predetermined cost which is calculated from managements standards of efficient operation and the relevant necessary expenditures.

STANDARD COSTING: Standard costing is a technique which is complimentary to the actual costing or historical costing. They serve as yardsticks against which actual costs are compared to know the reasons of inefficiencies. DEFINITION: Standard costing is the preparation of standard costs and applying them to measure the variations from actual costs and analysing the causes of variations with a view to maintain maximum efficiency in production. It is a technique which uses standards for costs and revenues for the purpose of control through variance analysis.

BUDGETARY CONTROL

STANDARD COSTING

Budgetary control can be prepared on the basis of past figures adjusted to future trends. Budgets are based on past actual adjusted to future trends.
Deals with operations of a department as a whole. Compiled for all items of income and expenditure.

Some form of budgeting is essential to establish standard costs.

Standards are based on technical assessments.

Compiled for various elements of cost. Set for production and production expenses.

Budgets set up maximum limits of expenses.

Standards set up targets to be attained.

They are a projection They are a projection of financial accounts. of cost accounts.
Variances are not revealed through the accounts but in total. Variances are revealed through different accounts.

They are anticipated They tell what the costs should be & it is not or expected costs meant for forecasting. meant for forecasting.

STANDARD COSTS

ESTIMATED COSTS

Aims at what a cost should Assessment of what a cost be. will be. On scientific basis. Based on past performance. Emphasises on cost Used for fixing selling control, sets targets. price, quoting selling price of a job,etc. They are fixed for each It is for a part of a element of cost. business/ purpose. Used by concerns adopting Used by concerns adopting standard costing system. historical costing system. Used as a regular system It is statistical data only. of accounts.

 Current

standard: Standard relating to current conditions and established for use over a short period of time. (i) Ideal standard: It is based on a very high degree of efficiency which is rather impossible to achieve. It is a theoretical standard. (ii) Expected or attainable standard: It is anticipated during a future specified budget. It is suited from control point of view because it reveals real variances from the attainable performance.

 Basic

Standard: It is fixed for long periods to help forward planning. They remain unaltered for a long period of time. It is not suited from cost control point of view but will help in studying trends in manufacturing costs. Normal Standard: It is the average standard which is anticipated can be attained over a future period of time preferably to cover one trade cycle. It is based on average estimated performance over a future period. They cannot be as a device for the purpose of cost control.