Standard Costing Vs Budgetary Control

Standard Costing Vs Budgetary Control 

STANDARD COSTING
Standard costing is a cost accounting technique which compares the results of actual production with the basic standard, as anticipated, in terms of costs so as to determine the reasons for discrepancies between the anticipated and actual costs.

BUDGETARY CONTROL
Budgetary control is the process by which budgets are prepared for the future period and are compared with the actual performance for finding out variances, if any. The comparison of budgeted figures with actual figures will help the management to find out variances and take corrective actions without any delay.

BASIS OF DIFFERENCE	STANDARD COSTING	BUDGETARY CONTROL
MEANING	The costing method in which evaluation of performance and activity is done by making a comparison between actual and standard costs, is Standard Costing.	Budgetary Control is the system in which budgets are prepared and continuous comparisons are made between the actual and budgeted figures to achieve the desired result.
BASIS	Standard costing is determined on the basis of data related to production.	Budgets are prepared on the basis of management’s plans under budgetary control.
RANGE	It is limited to cost details.	It includes cost and financial data.
INTERDEPENDENCE	Budgeting is necessary for standard costing.	Standard costing is not necessary for adopting budgetary control.
CONCEPT	It is a Unit Concept.	It is a Total Concept in itself.
VARIANCES	It deals with the variances of elements of cost i.e. material, labour, overhead and sales separately.	It deals with total variances only.
INCOME/ EXPENSES	Standards are set for expenses only.	Budgets can be prepared for incomes also.
SCOPE	It is Narrow concept.	It is a Wider concept than standard costing.
REPORTING OF VARIANCES	It reports the variances.	It does not report the variances.
FORECASTING	It cannot be used for forecasting.	It can be used for forecasting purpose also.
PROJECTION	It is the projection of cost accounts.	It is projection of financial accounts.
STANDARDIZATION OF PRODUCTS	It requires standardization of products.	It does not necessarily requires standardization of products.
EFFECT OF TEMPORARY CHANGES IN CONDITIONS	The short term changes will not influence the standard costs.	The short term changes will be shown in the budgeted costs.
COMPARISON	It compares Actual costs and standard cost of actual output.	It compares Actual figures and budgeted figures.
APPLICABILITY	It is applicable in Manufacturing concerns only.	It is applicable in All business concerns

CONCLUSION :

Both Standard Costing and Budgetary Control are the techniques which provide a yardstick to judge the performance and analyze disagreement of the actual and estimated figures. Budgetary Control makes side by side comparisons, and that is why periodic revisions are made in the budgets, and that is why there is no need for reporting the variances, which is absent in Standard costing.