Standard costing

Question 1

What are standard costs?

Answer 1

Target costs that should be incurred under efficient operating conditions.

Question 2

What is standard costing?

Answer 2

A system whereby a comparison can be drawn between:
- what should be done at SC
- what was done at actual costs
Analyses performance in detail.

Question 3

Difference between standard costs and budget cost.

Answer 3

Standard cost
- pre-determined target cost per unit
Budget cost
- target cost in total.

Question 4

Describe the Sales variances

Answer 4

Sales variances are calculated between the original budget and actual results.
1) Sales volume variance
- difference between budgeted sales quantity and actual sales quantity
1) Sales price variance
- difference between budgeted selling price and actual selling price