CH 12 PPT Flashcards
What are standards and who gives them
they are common in business often from the government (regulations)
what are standard costs
predetermined unit costs
Standard costs are used as mesures of what
performance
how are standards adn budgets the same
- use predetermined csots
2. part of management planning and control
a standard is a __________ amoutn where a budget is a ________
unit
total
What are the advantages of standard costs
- Facilitates managements planning
- Promotes economy by making employees more cost conscious
- Help set selling prices
- Contribute to management control by providing a basis for evaluation of cost control
- Help highlight variances in management by exception
- Simplify costing of inventories and reduce clerical costs
What is required when you set standard costs?
Requires input from all persons who have responsibility for Ciara and quantity
Costs should be current and under continuous review
What are two levels of standard costs
- Ideal standards
2. Normal standards
What does idea standard represent?
Optimum levels of performance u dee perfect operating conditions
What does normal standard represent?
Efficient levels of performance attainable under expected operating conditions (rigorous but attainable)
What is direct material price standard
Cost per unit if DM that should be incurred
Bases on purchasing departments best estimate of the cost of raw materials
What does standard DM price also include
Includes related costs such as receiving, storing and handling
What is direct materials quantity standard?
The quantity of DM that should be used per unit of finished goods
What is the direct materials quantity based on?
Based on physical measures such as lbs, kg, barrels etc
Considers both quantity and quality of materials required
What does DM quantity standard include
Allowance for unavoidable waste and normal storage
