Share what you know with millions of people
Focus is the best place to turn what you know into remarkable content
0
What is the difference between normal costing and standard costing?
Events
- Live now Dos and Don'ts of Small Business Marketing May 29 @ 11 am PT
- Lead Nurturing 202: The Next Generation May 31 @ 11 am PT
- The Tricks to Paid Media June 6 @ 11 am PT
- Display Advertising for Brand Awareness June 20 @ 11 am PT
Related Activity
2 Answers
Best way I know how to describe it is that Normal costing can use a number of methodologies to get to a actual cost. This can be used for pricing or inventory valuation etc.
Stand costing is based on assumed costs - usually derived at budget time. Variations from these costs are accounted for in special accounts called variance accounts wich are specifivcally defined. There are a whole range of these accounts. When a trading item is accounted for it is done sat the assumed standard set of accounts. When the actual cost or purchase is accounted for the amount is broken down into the standard and the variances and held in separate accounts.
Tony's explanation is good. I would just add that 2 of the most common actual costing methods are Average and FIFO (first in first out). Standard costing is usually used in manufacturing companies. Some systems will support multiple costing methods and even different methods of costing for different classes of inventory, although I wouldn't recommend doing that, unless it is absolutely necessary.
Answer This Question