MI – Nov 2020 – L1 – SB – Q4a – Costing Techniques

Identify the purposes of standard costing systems and the types of standards used in management information.

Question

a. Standard costing systems are widely used because they provide cost information for many different purposes.

Required:
i. Identify FIVE of such purposes. (5 Marks)
ii. State THREE types of standards. (3 Marks)

Answer

i Providing a prediction of future costs that can be used for decision
making purposes.
ii Providing a challenging, target which individuals are motivate to a
achieve.
iii Assisting in setting budgets and evaluating managerial performance.
iv Acting as a control device by highlighting those activities which do
not confirm to plan.

i. Basic standards
ii. Ideal standards
iii. Attainable standards
iv. Current standards

Tags: Budgeting, Cost Control, Standard Costing, Types of Standards
Level: Level 1

Topic: Costing Techniques
Series: NOV 2020

Uploader: Dotse