State and explain the problems encountered in setting up standard costs.

Management Accounting Block Revision Mock Exams

 Problems in standard costing

  • Heavy load of input data is required which is expensive.
  • Standard costing is only applicable where processes or jobs are of a repetitive nature
  • Inaccurate standard costs will lead to bad results when compared with actual results.
  • Because of uncertainty in areas like inflation standards need to be continually updated and revised.

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