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Highlight four disadvantages of standards costing.

      

Highlight four disadvantages of standards costing.

  

Answers


Martin
Disadvantages of standard costing
- Standard costing system may suffer from certain disadvantages.
1. The system may not be appropriate toot he business.

2. Ineffective for control purposes if not understood properly by the managers and other staff members. Therefore, the staff may not be capable of operating the system.

3. A business may not be able to keep standards up-to-date. In other words, a business may not revise standards to keep pace with the frequent changes in manufacturing conditions. Therefore, in rapidly changing situations, the standards become out of date and lose their effect.

4. Inaccurate and unreliable standards cause misleading results and thus may not enjoy the confidence of the users of the system.

5. Operation of the standard costing system is a costly affair and small firms cannot afford it. To install and keep up-to date the system of standard costing (Revision of Standard) may be very expensive and time consuming.

6. Standard costing is expensive and unsuitable in job order industries manufacturing non-standardized products.
marto answered the question on February 26, 2019 at 07:18


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