Introduction: Definition of standard cost according to CIMA London, “predetermined cost which is calculated from management standards for efficient operations and necessary expenditure relevant. » These are predetermined costs on the technical estimate of labor and overhead for a selected period of time and for a prescribed set of working conditions. In other words, a standard cost is an expected cost for a unit of product or service rendered. (Langfield-Smith, 2009) The technique of using standard costing for cost control purposes is known as standard costing. This is a cost accounting system designed to determine what the cost of a product should be under existing conditions. The actual cost can only be determined at the time production is undertaken. The predetermined cost is compared with the actual cost and the gap between the two allows management to take necessary action. Standard costing is an essential subtopic of cost accounting. Standard cost is generally related to the cost of direct materials, direct labor, and manufacturing overhead. of a manufacturing company. Rather than assigning the actual cost of direct materials, direct labor, and manufacturing overhead to a product. Many manufacturers assign the expected or standard cost. This means that the manufacturer's inventory and cost of goods sold will start with standard cost and not actual costs. As a result, there are almost always differences between actual cost and standard costs, and these differences are called variances. (Langfield-Smith, 2009). The two underlying principles of standard costing are:1. A standard set before a period is a satisfactory measure throughout the period.2. Performance is acceptable if it meets the...... middle of paper ......ieved May 18, 2014, from Insidebusiness360.com: ttp://www.insidebusiness360.com/index.php/disadvantages- of-standard-costing-12846/Denis Caplan (2014), management accounting: concepts and techniques. Accessed May 18, 2014, http://classes.bus.oregonstate.edu/spring-07/ba422/Management%20Accounting%20Chapter%2010.htmHilton, R.W. (2010). Management Accounting: Creating Value in a Dynamic Business Environment. McGraw-Hill. Langfield-Smith, K. T. (2009). Management accounting. North Ryde: McGraw Hill. Limitations of cost and standard deviation analysis (2014). Retrieved May 17, 2014. http://accounting-simplified.com/management/variance-analysis/disadvantages-of-standard-costing-and-variance-analysis.html#sthashMarie A, R. (2010). Is standard cost relevant? In Winter Quarterly Management Accounting. Dubai.R, K. (2012). The evolution of management accounting.