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Standard costing overview standard costing is the practice of substituting an expected cost for an actual cost in the accounting records subsequently variances are recorded to show the difference between the expected and actual costs this approach represents a simplified alternative to co
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Standard costing and the related variances is a valuable management tool if a variance arises management becomes aware that manufacturing costs have differed from the standard planned expected costs if actual costs are greater than standard costs the variance is unfavorable
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To allow for deficiencies in absorption costing data strategic finance professionals will often generate supplemental data based on variable costing techniques as its name suggests only variable production costs are assigned to inventory and cost of goods sold
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