The technique of determining both standard cost and estimated cost is the same and accounting procedures are also equally the same. But, they have the differences with each other which are given below.
Differences between Standard Cost & Estimated Cost
|Standard Cost||Estimated Cost|
|1. It gives an emphasis on "What should be the Cost".||1. It presumes that what will be the cost.|
|2. It uses the parameter of efficiency||2. It uses the perception of efficiency applied.|
|3. It is revised at frequent intervals||3. It cannot be revised since there is no need of revision.|
|4. It is ascertained on the assumption that free movement of cost will not be allowed.||4. It is ascertained-on the assumption that free movement of cost.|
|5. It is more stable in nature.||5. It is more flexible and changed at every change of situation.|
|6. It is a reliable tool of cost control.||6. It cannot be used as a cost control.|
|7. It is used only when complete cost data are available.||7. It can be used in every situation.|
|8. It is used for finding variances.||8. Variances cannot be find out from the estimated costs.|
|9. Scientific basis is applied to set standard cost.||There is no scientific basis used but only approximations are used to set estimated cost.|
|10. It is applied if the organisation has standard costing system.||10. It is applied in every business organization|
The above are some of the differences between standard cost and estimated cost.