After studying this chapter you should be able to:
Understand the terms: standard, standard cost and standard costing.
Elucidate the salient features of a standard costing system.
Distinguish standard costing from budgetary control, historical costing and estimated costing.
Enumerate the advantages and limitations of standard costing.
Know the prerequisites for installation of a standard costing system.
Determine setting standards and analyse the problems in setting standards.
Understand the concept of standard hour and variance ratios.
Understand the terms: variance analysis and variance accounting.
Analyse all variances relating to material, labour, overhead and sales.