7. Standard or pre-established costs
In all the foregoing, we have dealt with actual costs, calculated on the basis of an analysis of the period's expenses recorded in the accounts.
But the management system can also use standard, pre-established or forecast costs, to speed up certain procedures, or to enable budgetary control.
7.1 Speeding up procedures
Let's take the example of raw materials consumption in the calculation of production costs. This consumption is valued at purchase cost, on removal from the materials inventory. However, to determine this purchase cost, we have to wait until the end of the period to be able to process all the expenses. Consumption takes place during the period. If you want to account for the withdrawal immediately, it's best to keep...
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Standard or pre-established costs
Conclusion
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It's important to understand that this article is only a brief introduction to the basics of cost accounting, which is a fundamental discipline in management and features prominently in all accounting training courses in France and the French-speaking world; in business schools, in university management courses and in establishments such as CNAM-INTEC.
So there are bound to be a host of excellent...
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