Standard costing is a well-established cost accounting method that has been used in manufacturing for many years. It involves setting standard costs for materials, labor, and overhead, and then comparing these standards to actual costs to identify variances.
While there has been some criticism of standard costing in recent years, it is unlikely to disappear entirely. There is still a role for standard costing in the new manufacturing environment, although this role may have changed somewhat.
One area where standard costing is still relevant is in costing for internal management purposes. Even in today's highly automated and technologically advanced manufacturing environments, standard costing can provide a useful benchmark for evaluating performance and identifying areas for improvement.
Another area where standard costing may still be useful is in industries where there is a high degree of variability in product or process complexity. In these situations, standard costing can help manufacturers to set realistic expectations for cost and profitability, and to identify areas where costs may be out of control.
However, it's worth noting that in many cases, traditional standard costing may need to be adapted or supplemented with other costing methods to be effective. For example, activity-based costing (ABC) or lean accounting methods may be more appropriate for certain types of manufacturing processes.
In conclusion, while standard costing may not be the most cutting-edge cost accounting method available, it still has a role to play in the new manufacturing environment. By using standard costing as a starting point and supplementing it with other methods as needed, manufacturers can gain valuable insights into their costs and performance, and identify opportunities for improvement.