Chapter_25_Selected_Solutions

Chapter_25_Selected_Solutions - CHAPTER 25 - SELECTED...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAPTER 25 -- SELECTED SOLUTIONS LO 1 Q 1 Standard costs are realistically predetermined costs that are developed from analyses of both past and projected future costs and operating con- ditions. They are usually expressed as a cost per unit of finished product. SE 1 Standard costing helps managers do their jobs better. Once standard costs have been developed, they can be used in budget preparation and to evaluate prices for direct materials and direct labor during the period. At the end of the period, they are used to identify areas of efficiency and inefficiency through variance analysis. E 1 To: Sydney Tyson From: Summer Diaz Date: Today's Date SubjecNeed for a Standard Costing System at Market Research Company Since assuming the duties of controller, I have noticed that the existing accounting system is not as accurate as it could be for cost planning and control. I would like to propose that we develop and install a standard costing system to alleviate this de- ficiency. Standard costs are realistically predetermined costs that are developed from analyses of past and projected future costs and operating conditions. Once developed, standard costs, quantities, and labor and machine times form a set of projected operating results that can be used to measure how well our employees performed and how well our resources were utilized during a period of time. Stan- dard, or projected, results are compared with the actual results, and any differ- ences, called variances, are computed and analyzed to identify causes for operating variations. The cost of installing such a system will be approximately $7,500, which includes de- velopment and installation time, consultants' fees, and a program to train managers in the use of the system. I anticipate cost savings of at least that amount in the first six months of operations. I propose that we embark on this project as soon as pos- sible. If you have any questions, I will be happy to meet with you to discuss this proposal. SD 3 Refer to the solution of SD 3 in the Full Solutions file on DOT LRN. LO 2
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 18

Chapter_25_Selected_Solutions - CHAPTER 25 - SELECTED...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online