Discuss how standard costing is used in management planning and control systems!

Standard costs, flexible budgeting, and variance analysis--all are vital components of an effective cost accounting system. Standard Costs are predetermined costs that are usually expressed on a per-unit basis; they are target costs, costs that should be attained. One can think of a standard as a budget for a single unit. Standard costs are the building blocks of a flexible budgeting and feedback system (the comparison of actual performance with planned performance). Since the company's …

…actions in terms of labour, material, machines or money so that planned outcome conforms to actual outcome. Another possibility is to adjust the planned budget according to the altered requirements. The entire process is known as "system-feedback-loop", and it indicates that planning and control process is dynamic and that a standard cost system can support the management decision making process by discovering better ways of adhering to standards, of altering standards, and of achieving objectives.