Standard costs establish the minimum desirable costs, Cost Accounting

Standard Costs Establish the Minimum Desirable Costs

When actual costs incurred exceed or else are below the standard costs, we after that investigate the variances along with an objective to take suitable corrective measures. Standard costing, on another hand, is explained as the process of establishing predetermined estimates of the costs of products and services and comparing this along with the actual cost when they are incurred. Hence, it is an exercise that finds out the expected cost levels under specific conditions standard costs, after that applies the standard costs to the real performance or performance analysis so as to find out the difference or variance.  This variance can be good like favourable or bad like un-favourable depending on whether this is more or less than the standard; this is the basis of taking corrective action or Control. The difference needs to be further analyzed to find out how it came about. It is referred to as variance analysis and it is significant since it pinpoints the exact reasons of favourable (F) or unfavourable (U) deviation. Such purposes can be accurate so as to achieve the desired performance.

Posted Date: 2/7/2013 5:08:30 AM | Location : United States

Related Discussions:- Standard costs establish the minimum desirable costs, Assignment Help, Ask Question on Standard costs establish the minimum desirable costs, Get Answer, Expert's Help, Standard costs establish the minimum desirable costs Discussions

Write discussion on Standard costs establish the minimum desirable costs
Your posts are moderated
Related Questions
A plant is considering the replacement of a piece of equipment in its materials handling system with a new piece. If the company's cost of capital is 10%. Should the present asset

Rosco Company purchased 35,000 shares of common stock of Paxton Corporation as a long-term investment for $900,000. During the year, Paxton Corporation reported net income of $300,

Describe the manner in which a materials usage variance is divided into mix and yield component variances.

Allie forms Broadbill Corporation by transferring land (basis of $125,000, fair market value of $775,000), which is subject to a mortgage of $375,000. One month prior to incorporat

Direct Labour Rate Variance It is the difference among the actual direct labour rate and the standard direct labour rate for the total hours worked. Utilizing an equation,

Why do we separate factory overhead from materials and labor?

Small Steps sells step stools. Their budget information is shown below. selling price: $40 per stool Variable expense:$30 per stool Fixed Expense:$24,000 use the above inform

The Pacific Manufacturing Company operates a job-order costing system and applies overhead cost to jobs on the basis of direct labor cost. Its predetermined overhead rate was based

The Accountant has also asked for you to assist in preparing the statement of financial position (balance sheet) for the Construction in Building partnership for the year ended 30

Sleep Corporation was organized on January 1, 2011. During its first year, the corporation issued 40,000 shares of $5 par value preferred stock and 400,000 shares of $1 par value c