Standard Costing
Standard costing is a cost accounting methodology that involves establishing predetermined costs for products or services, which serve as benchmarks for evaluating actual performance. It is used to set budgets, control costs, and analyze variances between expected and actual expenses in manufacturing and service industries. This system helps organizations monitor efficiency, identify areas for improvement, and support decision-making in financial management.
Developers should learn standard costing when working on financial software, enterprise resource planning (ERP) systems, or analytics tools that involve cost tracking and performance evaluation. It is particularly useful in industries like manufacturing, where precise cost control is critical for profitability, and in developing features for variance analysis, budgeting modules, or integration with accounting systems to enhance operational insights.