Standard Costing | Planning and Control System

Running head: MANAGERIAL ACCOUNTING
MANAGERIAL ACCOUNTING
Name of the Student
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Author Note

MANAGERIAL ACCOUNTING
Table of Contents
Introduction................................................................................................................................2
Standard Costing in Planning and Control System....................................................................2
Implementation of Standard Costing System.............................................................................4
Cost Management Challenges faced by the Active Sports Life.................................................6
Targeted Costing Method in IIT Inc..........................................................................................7
Recommendations......................................................................................................................9
Process Costing......................................................................................................................9
Job Costing...........................................................................................................................10
Conclusion................................................................................................................................10
References................................................................................................................................11

MANAGERIAL ACCOUNTING
Introduction
The report consists of the features related to the standard costing which has been
explained in the planning and control system. The organizations that has been selected for the
explanation of the use of standard costing and target costing are Active Sports Life (ASL)
and IIT Automotive. After the discussion of the standard costing, a comparison has been done
with the target costing and the use in the today’s world is being evaluated in this report. In the
last part, recommendation has been provided with the two system that can be used in costing
with the references of Active Sports Life (ASL) and IIT Automotive.
Standard Costing in Planning and Control System
The standard costing can be defined as a tool which an organization uses for the
budget planning and it does help in controlling and managing the costs which has also
benefitted in estimating the performance and analyzing the cost management (Lowe 2019). In
the system of standard costing, the costs that are included are of staffs, materials and there are
also other costs included that helps in the establishment of estimation price of the
management, and usage of material and labor usage, as well as the volume of production and
budgeted overhead costs (Vijay et al. 2016). There are certain uses of standards that has been
used for inventory valuation and it is being compared to the actual costs. There is an
involvement of the cost that has been estimated which is usually required for the process of
production. There is determination of the accounting standards that has been set before the
accounting period begins which is usually related to the amount and it is also been required
for the process of production (Sargento et al. 2018). The standards that has been used are also
for planning the budget and related to production.

MANAGERIAL ACCOUNTING
There are certain involvements in the standard costing in an organization where the
actual costs are being recorded. If the actual costs are being compared to standards costs, then
the variance will be found easily with the help of standard costing. Thus, the analysis of
variance is being found very easily. The management team helps in analyzing the variance
and after that it will be done by them which is being necessary and need in that organization.
The direct material costs and amounts is evaluated at the end of financial period. There has
been a utilization of actual amount and the pay rate of the direct labor that has been set earlier
(Hunter et al. 2016). The variance that has been examined are being done by the difference
between the actual costs and standard costs, this will help the managers so that it will help the
look which the costing has been implemented in the organization which does help in
management cost and the operational efficiency is also been improved.
The standard costing has many features through which the organization can get
benefitted, as there is budgetary control at the time of operation. The organization can help in
performance evaluation and also help in suggesting that in which way it will be beneficial for
the organization (Gc et al. 2018). The labor suppose it is overloaded, then it will further help
in the economic appeal. There are certain factors which help in the motivating employees
within the organization so that it helps in the improvement of performance and help in setting
standard of that particular organization. The important information is being sent by
management team of organization and the element are there that are related to the costs which
will be included in the quotations that will help in fixing the price in which the buyers will
but the product of that particular organization (Maskell, Baggaley and Grasso 2017). It can be
used for controlling the price, that will help the management and a proper valuation can be
made upon the finished products and work in progress which has been included in the
inventory. At the time of fixing the prices, it will help in taking any decisions that will help
the management personnel will in future will benefit the particular organization.