Chapter 9. STANDARD COSTING, FLEXIBLE BUDGETS AND VARIANCE ANALYSIS. Setting standards and next steps. Standards are performance benchmarks that allow comparisons against actual performance.
Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.
STANDARD COSTING, FLEXIBLE BUDGETS AND VARIANCE ANALYSIS
3. Reporting. Standard costs simplify calculating profits and valuing inventories.
(am - sm) × AV = (£0.50 - £1.00) × 110,000 units = 0.5 × 110,000 = £55,000U
DrinkNat could expect using 4,400 MH.
Using the standard allocation rate of £7.50/MH (based on dividing £30,000 budgeted VOH and 4,000 MH), as done on you will allocate:
4,400 MH × £7.50/MH = £33,000 VOH Check that this figure is in DrinkNat’s flexed budget (Table 9.5).
£31,000/5,000 MH = £6.20/MH – lower than the standard.
Research persistently reports the popularity of standard costing and variance analysis.