10014_042810_18 - Chapter 11 Continuation of Responsibility...

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Chapter 11 – Continuation of Responsibility Accounting Feedback: I. Standard Costs – how much should inputs (DM, DL, VOH) cost and how much should we use to make our product or provide a service? A. Management by Exception 1. Standard – norm for measuring performance o For each unit of input: Quantity – how much should we use? Cost – how much should we pay? 2. Compare actual input to standard input 3. Only check out those variances that are large (management by exception) 4. Standards are communicated to employees through a standard cost card a. Shows quantities and cost of inputs to produce 1 unit of product Cost Card Template Inputs Qty x Price Total -- -- -- Example: Chapter 11 Handout Inputs Qty x Price Total DM ¾ lb. $6 $4.50 DL 2 hrs. $12 $24.00 VOH 2 hrs. $4 $8.00 ** When DL hours is your cost driver, DL hours = VOH hours B. Setting Standard Costs 1. Ideal: 100% efficiency, no breakdowns in equipment, work interruptions
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This note was uploaded on 08/25/2010 for the course ACCT 208 taught by Professor Kingery during the Spring '08 term at University of Delaware.

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10014_042810_18 - Chapter 11 Continuation of Responsibility...

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