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Standard Costing - ICAI Knowledge Gateway

5 Standard Costing LEARNING OBJECTIVES : After studying this unit you will be able to understand: The meaning of Standard Costing and its definition How a Standard Costing system operates How to calculate material, labour, overhead, sales variances and reconcile actual profit with budgeted profit Distinguish between Standard variable Costing and Standard absorption Costing How to prepare a set of accounts for Standard Costing system. Relevant Terms* Standard Benchmark measurement of resource usage or revenue or profit generation, set in defined conditions.

Standard Costing 5.3 Budget Variance “Difference, for each cost or revenue element in a budget, between the budgeted amount and the actual cost or revenue.

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