ch 11

Question 1

what is a standard cost

Answer 1

a standard cost is a budget for a single unit of product

Question 2

how can a standard cost be used

Answer 2

used a performance benchmarks against which to evaluate actual costs

Question 3

which is better? Ideal or practical?

Answer 3

Ideal: is best for lean producers who strive for perfection
Practical: typically used by traditional manufacturers who want to use motivational, yet realist, benchmarks

Question 4

information used to develop standards

Answer 4

companies use a combination of:
historical, current, and projected data
managers often use engineering time and motion studies to determine the quantity of time and materials needed to produce each unit

Question 5

how often should the standard cost be updated

Answer 5

standard costs should be reviewed at least once a year and updated whenever a non-temporary change in costs, inputs, or processes occurs

Question 6

standard cost (standards)

Answer 6

the budget for a single unit of product

Question 7

ideal standards

Answer 7

standards based on perfect or ideal conditions that do not allow for any waste in the production. machine breakdown, or other inefficiencies
(perfect standards)

Question 8

practical standards

Answer 8

standards based on currently attainable conditions that include allowances for normal amounts of waste and inefficiency
(attainable standards)