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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April 22, 2010
Conduct next period’s operations
Prepare standard cost performance report
Difference betweenactual price and standard price
Difference betweenactual quantity andstandard quantity
Actual Quantity Actual Quantity Standard Quantity × × × Actual Price Standard Price Standard Price
(AQ × AP) – (AQ × SP) (AQ × SP) – (SQ × SP)
AQ =Actual Quantity SP =Standard PriceAP =Actual Price SQ =Standard Quantity