Q.Explain in details with example:- Control and Cost Reduction are the two important factors by which Manufacturing companies may increase their Profits. One of the most important tool is the installation of Standard Costing system. But companies have to be very careful while deciding the Proper interpretation of variances from standard is very important for the success of standard costing system as a tool for Cost Control. Mention some important factors that must be born in your mind while interpreting variances.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Q.Explain in details with example:-
Control and Cost Reduction are the two important factors by which Manufacturing
companies may increase their Profits. One of the most important tool is the installation of
Proper interpretation of variances from standard is very important for the success of standard
costing system as a tool for Cost Control. Mention some important factors that must be born in
your mind while interpreting variances.
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