Standard costing: Meaning, advantages and variances.
By Aggarwal, C.
Aggarwal, C. (2025, March 9). Standard costing: Meaning, advantages and variances. Shiksha. https://www.shiksha.com/online-courses/articles/standard-costing-meaning-advantages-and-variances/
Aggarwal provides a comprehensive overview of standard costing as a management tool for performance measurement and cost regulation. The article defines standard costing as the practice of estimating the expenses of a production process in advance to compare them with actual results. It explores the diverse advantages of this approach, including improved budgeting accuracy, enhanced efficiency, and simplified bookkeeping. Furthermore, the work classifies various types of variances, such as price and volume variances, explaining how each contributes to an organization’s understanding of its fiscal health. The author argues that while standard costing is traditionally associated with manufacturing, its principles of goal setting and performance evaluation are broadly applicable across various business sectors. This source is particularly useful for students and practitioners needing a clear introduction to the strategic utility of cost standards in organizational decision-making.