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
How do you calculate the standard DM cost per unit
Standard DM price x standard DM quantity = standard DM cost per unit
What is direct labour price standard
the rate per hour that should be incurred for direct labour
What is the direct labour price standard based on
based on current wage rages adjusted for anticipated chagnes such as cost of living adjustments
What does direct labour standard cost include
employer payroll taxes adn benefits holiday and vacation pay
What is direct labour quantity standard
time that should be required to make one unit of the product
- critical in labour intensive cmopanies
- allowance should be made for rest periods, cleanup, machine setup and machine downtime
How do you calculate standard direct labour cost per unit
standard direct labour rate x standard direct labour hours = standard DL cost per unit
what is the manufacutring overhead standard
a standard predetermined ovrehead rate is used
what is the calculation for standard MOH
budgeted overhead costs / expected standard activity index
What is the total standard cost per unit
sum of standard csot for DM, DL and MOH
- done for each product and often recorded on a standard cost card
What is a standard cost card
provideds the baisis for determining variances from standards
What is the variances from standard csots
difference between total actual costs and total standard
When actual costs are higher than standard it is called
unfavorable vairaince
if quality control standards are sacrficed THE VARIANCE IS
NOT FAVORABLE
