Cost accounting

This query is : Resolved

Asawari Malhotra (Querist)

17 September 2013 Dear Sir, what is the difference between standard cost and budgeted cost ? for a particular cost unit, can they be different?
also, is it that by standard cost you set a standard for your costs that you would like to achieve and budgeted is the actual cost expected to be incurred in future? so these two terms can be different..

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)

17 September 2013 Budgeted cost and standard cost both are different. budgeted cost is the cost which predicted for the particular product production based on some assumption. but standard cost is the cost preset according to some specific standards

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CA Pallav Singhania

CA Pallav Singhania (Expert)

17 September 2013 Agree with the Expert,

In addition,

1. Budgetary control deals with the operation of a department or the business as a whole in terms of revenue and expenditure. Standard costing is a system of costing which makes a comparison between standard costs of each product or service with its actual cost.

2. Budgetary control covers as a whole in terms of revenue and expenditures such as purchases, sales, production, finance etc. Standard costing is related to a product and its cost only.

3. Budgetary control is applicable to utmost all business organizations. Standard costing is applicable to manufacturing concerns producing standard products and services.

4. Budgetary control is concerned with a specific period and is based on the totals of amounts. Standard costing is concerned with the standard costs, which are worked out generally per unit of production.

5. Budgetary control is not based on standard costing system. Standard costing cannot exist in the absence of a budgetary control system.

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