The Effect of using Standard Costs in Controlling Cost Elements

Abstract

Abstract: Recently, standard costs are widely used in cost management because of companies' needs to remain competitive for better productivity and cost. To achieve that goal, standard costs have been used in good cost management in order to control the cost elements in production. This study aims to find out the effect of using standard costs in controlling the elements of cost. The method used in this research is descriptive qualitative analysis and uses a literature study to collect the data. The research results show that cost control using standard costs can enable companies to carry out their planning and control functions easily, while standard costs can also be used to support management functions by communicating targets and maintaining an efficient internal control system. Some of the negative aspects that managers might consider when setting standard costs are that individual performance can be performance-oriented, lack of motivation of other employees, poor morale, frustration, and resistance.