Standard costing


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  • Created by: alex
  • Created on: 26-02-14 16:27
What does standard costing do?
Sets out a pre-determined/budgeted cost for materials, labour and overheads in advance of production.
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Name three ways standard costing can be used
- Help in decision making - planning - controlling costs
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What is a variance?
A calculated difference between standard cost/revenue against actual cost/revenue
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With standard costing, what can variances and sub-variances be calculated for?
Materials labour and overheads.
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Formula for material variance
(STD QTY X STD PR) - (ACT QTY X ACT PR)
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Materials price variance
ACT QTY (STD PR - ACT PR)
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Material usage variance
STD PR (STD QTY - ACT QTY)
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Labour variance
(STD HR X STD RATE) - (ACT HR X ACT PR)
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Labour rate variance
ACT HR (STD RATE - ACT RATE)
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Labour efficiency variance
STD RATE (STD HR - STD HR)
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SALES VARIANCE
(STD QTY X STD PR) - (ACT QTY X ACT PR)
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Sales volume variance
STD PR (STD QTY - ACT QTY)
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Sales price variance
ACT QTY (STD PR -ACT PR)
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What are interrelationships of variances
Where one variance has no effect on another.
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Variances can appear in the reconciliation statement which may take the form of what?
- Profit reconciliation statement -Cost reconciliation statement - Sles reconciliation statement
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Card 2

Front

Name three ways standard costing can be used

Back

- Help in decision making - planning - controlling costs

Card 3

Front

What is a variance?

Back

Preview of the front of card 3

Card 4

Front

With standard costing, what can variances and sub-variances be calculated for?

Back

Preview of the front of card 4

Card 5

Front

Formula for material variance

Back

Preview of the front of card 5
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