Why implement standard costing at all?

The main intent of any product cost calculation is to provide management with adequate and reliable information on the “true cost” of its products. It serves as a cost control mechanism across the business units and lays the foundation to maximize gross margin and to improve competitiveness. It also aids decision making with technical and manufacturing choices, investments, project profitability, or make versus buy decisions and provides the basis for inventory accounting and transfer pricing.

When companies manufacture and sell hundreds or thousands of unique products it is not practically viable to account for products at the unitary cost of e...