ECONOMICS

Detailed explanation-1: -Using standard costing also makes it easy for manufacturers to account for the changes in production costs with varying volumes while keeping the product price uniform across batches.

Detailed explanation-2: -Why Standard Cost Systems Are Adopted. Two reasons for adopting a standard cost system are: To improve planning and control. A standard cost system compares actual amounts with standard amounts to determine variances from the standard.

Detailed explanation-3: -Companies use standard costs for budgeting because the actual costs cannot yet be determined. This is because in the manufacturing process, it is impossible to predict the demand of a product or all the variables that will affect the costs of manufacturing it.

Detailed explanation-4: -Standard cost accounting can be a highly beneficial tool for managers who are attempting to plan a more accurate budget. Accurate budgets could lead to a more profitable and efficient business at the end of the day. This is because a standard costing system provides managers with a projected idea of spending costs.

Detailed explanation-5: -A standard cost system can be valuable for top management in planning and decision making. More reasonable and easier inventory measurements A standard cost system provides easier inventory valuation than an actual cost system. Under an actual cost system, unit costs for batches of identical products may differ widely.