Disadvantages Of Standard Costing

The following are the notable limitations or disadvantages of standard costing system:

* Standard costing system may be tedious, expensive and time consuming to install and keep up to date.

* The standard costing system controls the operating part of an organization only as it ignores the other items like quality, lead-time, service, customer satisfaction and so on.

* The standard costing system will become less useful in modern factories where the just in time principles are adopted.

* The standard costing system may not be applicable in case of small firms as it requires high degree of skill.

* The standard costing may not be very effective in those organizations where non-standardized products are manufactured and services are rendered.