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Accounting systems utilizing standards for product costs.
Standard Cost Systems
The real expense incurred for production.
Actual Cost
Predetermined cost for producing goods or services.
Standard Cost
Financial report showing revenues and expenses.
Income Statement
Attainable Standards
Standards set to be realistically achievable.
Using variance analysis to manage costs effectively.
Management Control
Difference between actual and standard material costs.
Direct Materials Price Variance
Actual cost less than standard cost.
Favorable Cost Variance
Differences between actual and standard costs.
Variances
Sequence of activities for performing a task.
Process
Actual cost greater than standard cost.
Unfavorable Cost Variance
Variance that can be influenced by management.
Controllable Variance
Workers with specialized training or expertise.
Skilled Employees
Difference between actual and standard material usage.
Direct Materials Quantity Variance
Difference between actual and standard labor rates.
Direct Labor Rate Variance
4,800 hours based on normal capacity.
Direct Labor Standard Hours
A detailed estimate of what a product should cost.
standard cost
4,500 hours used for production.
Actual Direct Labor Hours
Factory Overhead Rate=
Budgeted Factory Overhead at Normal Capacity/Normal Productive Capacity
Expected amount of materials or labor per unit.
Standard Quantity
(actual price - standard price) x actual quantity
direct materials price variance
Equipment not been properly maintained & Low quality direct material are causes of:
Unfavorable Quantity Variance
(Actual Rate per Hour - Standard rate per Hour) x Actual Hours
Direct Labor Rate Variance Equation
Standard Cost per unit=
Standard Price X Standard Quantity
What are 2 types of standard costs?
1) Quantity standards
2) Price standards