Accountants, do me a favour?

howard

I would like to ask you about accounting.

What is standardization of costing and invoicing.

Is it a standard cost? What is standard cost? Could you guys mind explaining me clearly?

Thank you in advance!

anton-u

OK. Let's start by defining Standard Costs. This is a very important topic under Cost Accounting, and it deals with the manufacturing world. You have certain costs in the manufacturing of products: the cost of materials, the cost of labor, and all the overhead costs of manufacturing the product.

Rather than assigning the actual costs of material, labor, and manufacturing overhead to a product, many manufacturers assign the expected or STANDARD cost, which also factors in markup. This means that a manufacturer's inventories and cost of goods sold will begin with amounts reflecting the standard costs, not the actual costs, of a product. Manufacturers, of course, still have to pay the actual costs. As you can imagine, there are almost always differences between the actual costs and the standard costs. Those differences are known as variances.

There is a lot more to it, but that is the base definition of Standard Cost.

Invoicing is the process where you you send and itemized bill to a client for payment. The invoice is the itemized bill for goods sold or services rendered. This is a core topic under Accounts Receivable.

With this in mind the Standardization of Costing is the process in which the standard costs of a manufacturing company are set.

There is a website that can answer most of your questions, if not all of them, and is an excellent resource. I have put it in the source section.

I hope this has adequately answered your question.