State direct material cost standard, Managerial Accounting

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State Direct material cost standard

The determination of direct material cost standard would involve:

a) Determination of quantity standards and

b) Determination of price standards

For determination material quantity standards for each material going as an input in the product, it is necessary to develop a product design and material specification as an input in a scientific manner on the basis of experiments/test runs. These specifications must be adhered to except in special circumstances when a revision is to be effected. If any should also be seceded on the basis of past experience or scientific analysis.

 


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