Table of Contents
What are the five advantages of cost principle?
Advantages of the cost principle
- Ease of financial record-keeping. Because the cost principle is merely the initial cost of an asset, it can be much easier to keep a record of this initial value.
- Objectivity.
- Cost of financial services.
- Lack of accuracy.
- Intangible assets may not be accounted.
- Example 1.
- Example 2.
What is standard costing and its advantages and disadvantages?
The primary advantages to using a standard costing system are that it can be used for product costing, for controlling costs, and for decision-making purposes. Whereas the disadvantages include that implementing a standard costing system can be time consuming, labor intensive, and expensive.
What is the main advantage of standard costs versus past costs?
Advantages of Standard Cost System: The use of standard costs is a key element in a management by exception approach. If costs remain within the standards, managers can focus on other issues. When costs fall significantly outside the standards, managers are alerted that there may be problems requiring attention.
Which of the following is not the advantages of standard costing?
| Q. | Which of the following is not an advantage of standard costing? |
|---|---|
| A. | It provides a basis for sensible cost comparisons |
| B. | It enables managers to employ management by exception |
| C. | It provides a mean of performance evaluation and employee rewards |
| D. | It is usually less expensive than actual or normal costing |
What are the advantages and disadvantages of cost audit?
(i) Proper audit of cost accounts helps in revealing errors. frauds and inconsistencies. (ii) Cost audit brings reliability in cost reports on the basis of which important decisions are taken. (iii) By concerete suggestions cost audit can being about improvement in systems and procedures.
What do you know about accounting standards?
Accounting standards are authoritative standards for financial reporting and are the primary source of generally accepted accounting principles (GAAP). Accounting standards specify how transactions and other events are to be recognized, measured, presented and disclosed in financial statements.
What are the disadvantages of standard costing?
The disadvantages include that implementing a standard costing system can be time consuming, labor intensive, and expensive….Three of the disadvantages that result from a business using standard costs are:
- Controversial materiality limits for variances.
- Nonreporting of certain variances.
- Low morale for some workers.
What are the features of standard costing?
Characteristics of Standard Costing
- Cost determination: Standard costing is designed to determine the cost of an output based on past experience and future trends.
- Cost comparison: When actual costs are known, these are compared to budgeted costs.
What is the purpose of using standard costs?
The main purpose of standard cost is to provide management with information on the day-to-day control of operations. Standard costs are predetermined costs that provide a basis for more effectively controlling costs.
How does Standard Costing help in keeping a control over costs?
Standard costs help management in cost control through the principle of exception, i.e., highlighting only those activities which fail to come up to standard or which exceed standard. Standards help develop cost conscious attitudes, because it makes cost variances clearly observable by management.
Which of the following is the advantages of standard costing Mcq?
The purpose of standard costing is to control cost and promote efficiency.
What are the advantages of using normal costing?
Improved cost control.
Standard costs are usually associated with a manufacturing company’s costs of direct material, direct labor, and manufacturing overhead. The disadvantages include that implementing a standard costing system can be time consuming, labor intensive, and expensive.
What are the benefits of a standard costing system?
Standard costing System has the following main advantages or benefits: The use of standard costs is a key element in a management by exception approach. Standards that are viewed as reasonable by employees can promote economy and efficiency. Standard costs can greatly simplify bookkeeping.
What are the uses of standard costing?
The various objectives of using a standard costing system in an organization are:- To control costs mainly by setting standards for each type of cost incurred – material, labour and overhead. To help in setting Budgets. To provide useful and detailed information for managerial planning and decision making. Helps in assessing the performance and efficiency of the staff and management.