Ch 10 Standard Costs

Ch 10 Standard Costs - Ch 10 Standard Costs A standard can...

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Unformatted text preview: Ch 10 Standard Costs A standard can be defined as a benchmark or f "norm" for measuring performance. Standards are used in many facets of day-to-day life. The broadest application of the standard cost idea is probably found in manufacturing and repetitive s probably found n manufactur ng and repet t e services firms. Such firms develop standards in detail for the materials , labor , and overhead cost of each separate product line. Ch 10 Flexible Budgets ADM 2341 1 Ch10 ADM2341 Standard Costs Ideal vs Practical Standards Ideal standards allow for no machine breakdowns or work interruptions, and can be attained only by working at peak effort 100 percent of the time. Such standards: probably discourage workers can't be used for decision purposes Practical standards allow for "normal" machine down time, employee rest periods, and the like. Such standards: are felt to motivate employees, since the standards are considered to be "tight but attainable" are useful for decision purposes, since variances from standard will contain only "abnormal" elements Ch 10 Flexible Budgets ADM 2341 2 Ch10 ADM2341 Standard Costs of inefficiency that can be controlled by management Methods of Establishing Standards Historical Data Ideal Conditions Current Attainable achievable under efficient (and normal) operating conditions Ch 10 Flexible Budgets ADM 2341 3 Ch10 ADM2341 Standard Costs Standard Costs and Flexible Budgets...
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This note was uploaded on 02/03/2010 for the course ADM ADM2341 taught by Professor Edden during the Winter '09 term at University of Ottawa.

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Ch 10 Standard Costs - Ch 10 Standard Costs A standard can...

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