What is Standard Costing?
Standard Costing is a method used to compare revenue and the standard cost with the actual result, to check the variance and its causes. It informs the management of the deflection and initiates correct measures for improvement.
It can be defined as the predicted cost per unit of the product manufactured during a period, based on different factors. It calculates the performance, inventory valuation, controlling the deviation, and deciding the selling price of the product. There are three main components of standard costing.
- Direct Material Cost
- Direct Labour Coat
Budgeting Control is a management operation that monitors budget, control cost, and service in a given accounting year. It helps the management to set a regulate performance and financial goal and helps the company get the desired results. It’s a procedure, in which company functions are outlined in advance, and compared with the real result later to see if the desired results are acquired or not.
Few major characteristics Budgetary control is:
- According to the policy, the budget is designed.
- The actual output and the target budget is often compared to review the performance of a company.
- If the existing condition change, revisions are made.
- Suitable action is taken if the desired result is not accomplished.
This article is ready to reckoner for all the students to learn the difference between Standing Costing and Budgetary Control.
|Basis||Standard Costing||Budgetary Control|
|Meaning||It is a method used to compare revenue and the standard cost with the actual result||It is a management function that monitors budget, control cost, and operation in a given accounting year|
|Scope||It limited to cost details.||Includes cost, financial data.|
|Comparison||Actual costs and standard cost of actual output||Actual figures and budgeted figures|
The above mentioned is the concept, that is elucidated in detail about ‘Difference between Standing Costing and Budgetary Control’ for the Commerce students. To know more, stay tuned to BYJU’S.