Advantages of Standard Costing

question 34

Essay

Advantages of standard costing
One of the stated advantages of standard costing is 'more stable product costs'.
i. List two other advantages of standard costing.
ii. Assume that the company's business activity has a strong seasonal pattern; namely, the volume of activity in the busiest month of the year is four times as large as the volume in the slowest month. Explain how standard costing gives more stable product costs in this situation. You may assume that, on average, fixed costs of production amount to more than half of the cost of the product.

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Definitions:

Premise

A basic assumption or statement that serves as the foundation for a logical argument or reasoning.

Scheduling Problems

Challenges associated with allocating resources or tasks over time, often seeking to optimize efficiency, meet deadlines, or reduce costs.

Industrial Application

The use of technologies, practices, and theories in industrial settings for the purpose of enhancing efficiency, productivity, and the manufacturing process.