Standard Costing System: Standard Costing system allows estimating the costs, preparing budgets for future periods, and analyzing the performance by comparing the budgets with actual results and find variances. Static Budget and Flexible budget: Static Budget is prepared on the basis of the expected level of output or production. The static budget shows the budgeted costs are revenue at an expected level of activity. The Flexible budget is prepared using the static budget. The Flexible budget is prepared to take the actual level of output or production as a basis. To Indicate: The reason why Flexible Budgeting method is better than traditional methods of budgeting
Standard Costing System: Standard Costing system allows estimating the costs, preparing budgets for future periods, and analyzing the performance by comparing the budgets with actual results and find variances. Static Budget and Flexible budget: Static Budget is prepared on the basis of the expected level of output or production. The static budget shows the budgeted costs are revenue at an expected level of activity. The Flexible budget is prepared using the static budget. The Flexible budget is prepared to take the actual level of output or production as a basis. To Indicate: The reason why Flexible Budgeting method is better than traditional methods of budgeting
Solution Summary: The author explains that Standard Costing System allows estimating the costs, preparing budgets for future periods, and analyzing the performance by comparing the budget with actual results and find variances.
Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.
Chapter 13, Problem 13.2.2C
To determine
Concept Introduction:
Standard Costing System:
Standard Costing system allows estimating the costs, preparing budgets for future periods, and analyzing the performance by comparing the budgets with actual results and find variances.
Static Budget and Flexible budget:
Static Budget is prepared on the basis of the expected level of output or production. The static budget shows the budgeted costs are revenue at an expected level of activity. The Flexible budget is prepared using the static budget. The Flexible budget is prepared to take the actual level of output or production as a basis.
To Indicate:
The reason why Flexible Budgeting method is better than traditional methods of budgeting
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What is Budgeting? | Budgetary control | Advantages & Limitations of Budgeting; Author: Educationleaves;https://www.youtube.com/watch?v=INnPo0QPXf4;License: Standard youtube license