Standard costing

Standard costing

standard cost = target/planned unit cost
1. types of standards
  1. basic
    1. to show trends over time, least useful
  2. ideal
    1. in perfect conditions, rarely achievable => adv motivational effect
  3. attainable
    1. efficient, but not perfect conditions
  4. current
    1. based on current levels, no incentive to improve
2. needed to prepare budgets
3. may be based on AC or MC
variance analysis
1. actual vs standard
2. sales variance
  1. sales price
    1. effect on profit of selling at a different price
      1. (Actual price - Standard price) x Actual quantity sold
  2. sales volume
    1. effect on profit from the change in volume of sales
      1. (Actual quantity sold - Budgeted quantity sold) x Standard margin
        where standard margin is
        standard profit per unit (AC)
        standard contribution per unit (MC)
    2. AQS > BQS => favourable variance, profit higher
  3. total sales variance = Sales price variance + Sales volume variance
3. raw materials variance
  1. materials price variance
    1. (Actual quantity bought x Actual price) - (Actual quantity bought x Standard price)
    2. standard price is usually set at mid-year standard, resulting in fav variances in beg of year, adv var later on
  2. materials usage variance
    1. (Actual quantity used x Standard price) - (Standard quantity for act prod x Standard price)
4. labour variances
  1. labour rate variance
    1. difference in rate paid
      1. Actual hours x Actual rate - Actual hours x Standard rate
  2. labour efficiency variance
    1. difference in hours worked
      1. Actual hours x Standard rate - Standard hours x Standard rate
5. variable overhead variances
  1. variable overhead EXPENDITURE variance
    1. var OH cost per hour changed
      1. Actual hours x Actual rate - Actual hours x Standard rate
  2. variable overhead EFFICIENCY variance
    1. working fewer or more hours than expected for actual production
      1. Actual hours x Standard rate - Stand. hours 4output x Stand. rate
  3. if variance is due to change in unit output, impossible to calculate subvariances
6. fixed overhead variances
  1. effect on profit of diff between actual and expected fixed overheads

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	Criado por Evgeniya Kachan mais de 9 anos atrás