17-05-2012, 01:39 PM
Standard Costing: A Managerial Control Tool
Standard Costing A Managerial Control Tool.ppt (Size: 634.5 KB / Downloads: 38)
Learning Objectives
Explain how unit standards are set and why standard cost systems are adopted.
Explain the purpose of a standard cost sheet.
Describe the basic concepts underlying variance analysis and explain when variances should be investigated.
Learning Objectives (continued)
Compute the materials and labour variances and explain how they are used for control.
Compute the variable and fixed overhead variances and explain their meaning.
Use variance analysis as an analytical tool for profitability analysis. (Appendix A)
Learning Objectives (continued)
Prepare journal entries for materials and labour variances and describe the accounting for overhead variances. (Appendix B)
Unit Standard Cost
To determine the unit standard cost for a particular input, two decisions must be made:
1. How much of the input should be used per unit of output ? (Quantity decision)
2. How much should be paid for the quantity of the input to be used ? (Pricing decision)
Types of Standards
Ideal Standards demand maximum efficiency and can be achieved only if everything operates perfectly.
Currently attainable standards can be achieved under efficient operating conditions.