April 22, 2010. Standard Costs. Today’s Agenda. What is Standard Cost and what is its purpose? How are they set? Direct Material Standard Direct Labour Standard Variable Overhead Standard Standard Cost versus Actual Cost Variance Analysis Benefits and Problems with Standard Cost.
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Conduct next period’s operations
Analyze variancesVariance Analysis Cycle
Prepare standard cost performance report
Difference betweenactual price and standard price
Difference betweenactual quantity andstandard quantityA General Model for Variance Analysis
Actual Quantity Actual Quantity Standard Quantity × × × Actual Price Standard Price Standard Price
Quantity VarianceA General Model for Variance Analysis
(AQ × AP) – (AQ × SP) (AQ × SP) – (SQ × SP)
AQ =Actual Quantity SP =Standard PriceAP =Actual Price SQ =Standard Quantity