The Standard cost is the estimated cost of performing an operation or even producing an individual good or service. These are normally under normal conditions. The Standard cost is used as a target value which is compared to the actual cost. The standard cost involves the materials, the labour and also the number of hours that are needed for making a particular item. It is developed for analysing the historical data from time to time. It is also called the standard cost. It is the cost per unit. It is designed for the purpose of making pricing decisions and also control the budget. For example, if a product is made out of wood,the material to be used is estimated to be higher so that it can be done fully due to wastages. The cost of the full piece of wood used is known as the standard cost because the waste materials are not needed and have no further use (Kraten 123).

The flexible budget engages different levels in the expenses into the budget being made. It depends on the changes that the actual revenue generates. It uses different percentages of the revenues for certain expenses instead of using real and fixed numbers. This quality allows the budget to experience a series of changes in the expenditure of the budget that the actual revenue incurs directly. Some changes, however, are ignored by the flexible budget. Many additional costs where a large number of changes occur, cause a more sophisticated and complicated format. The incorporation of these changes in the budget helps the company to compare the actual budget performances at the many levels of their activity. The budget restructures itself based on the levels of activities in the enterprise. It is a flexible and useful tool that is used by managers to model their financial results in the different levels available (Sharma 74).

The direct cost differences are the difference that occurs between the Standard costs and the actual expenses of the production of a commodity. There are two kinds of variances; efficiency and rate differences. The price variations are the measure of the differences between the direct cost of labor and the standard cost direct cost of the labor used for a particular period of the production. On the other hand, the efficiency variance is is the difference in measurement between the standard work that is used for the specific number of units that are produced in the actual number of hours that are used at the standard rate. Companies can calculate their dollar amounts by comparing the standard costs to the real costs. By doing this, they can make decisions that are efficient to the company’s finances (Rajasekaran and Lalitha 334).

Management is aimed at achieving differently defined goals that are set. There are various procedures that are aimed at ensuring that it is understood. Management sets standards for a company or business and also ensures that the performance is measured, and where there is a problem, corrective action is taken. In management control, the current performance of a business is compared to the planned performance. The two are compared and measured. The cause for the two differences is identified, and later a corrective action is set accordingly. This remedy ensures that the difference is minimized. It also describes the means at which a group’s or individual’s actions are constrained to performance in an organization or business. Their actions are constrained by a particular action which they are measured against. Management control helps an organization to achieve its set goals in a given period and also ensures that it eliminates its pitfalls. Management control is in two broad categories; regulative controls and normative controls (Tijhaar and Minnaar 291).