Post 2 - costs for production activities, usually under the...

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Katrina Rowsey 23 Apr 11 4:03 PM MST Standard costs are preferred by companies than actual costs for inventory valuation purposes. Actual costing requires that a new production cost be computed each period, Once a production process is established, however, the new costs are often not materially different from the old costs, so standards for each cost component can be developed and used as benchmarks to simplify the costing process and eliminate periodic cost recomputaions. Standards should be reviewed, and possibly revised, at a minimum of once per year to keep quantities and amounts current. Cost Accounting Hi Katrina, Standard costing is the process of creating and using estimated
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Unformatted text preview: costs for production activities, usually under the assumption of normal operating conditions. Since standard costs do not necessarily match actual costs incurred, the cost accountant must calculate variances between actual and standard costs, and charge the variances to the cost of goods sold . A variance can be either a price variance or a quantity variance. A price variance arises when the cost to purchase an item differs from its standard price. A quantity variance occurs when the number of units actually required to build a product varies from the amount specified in the standard costing system. Good post. Jack...
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This note was uploaded on 07/16/2011 for the course COST ACCOU 410 taught by Professor David during the Fall '10 term at Kaplan University.

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