Effectiveness of standard costing system in cost control

The study focused on examining the effectiveness of standard costing system in cost control within the motor industry by using South East Toyota (Pvt) Ltd as the case study. The study was motivated by the increase in operational costs of the company and its inability to maximize profitability from 2012 to 2014, regardless of having standard costing system under implementation specifically to control costs. Results showed that cost increases were largely as a result of inappropriate implementation of standard costing system and that they had triggered retrenchment of employees, stunted technological development, clientele loss, service pricing challenges and incurred losses. The results of the study would assist management in effective control of costs by means of standard costing system, which would enhance profitability maximization for the company. The researcher recommends the company to establish a standards committee, encourage involvement of employees in standards setting and improve communication from standard setting to results evaluation so that it can maximize and maintain profitability.