DIFFERENCE BETWEEN STANDARD COSTING AND BUDGETARY CONTROL

The difference between standard costing and budgetary control is as follows:

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.

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