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Chapter 10 - Standard Costs - 10-1 MG223 Standard Costs and...

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Chapter Ten MG223 Standard Costs and Overhead Analysis Standard Costs Standards are benchmarks or “norms” for measuring performance. Two types of standards are commonly used. standards specify how much of an input should be used to make a product or provide a service. standards specify how much should be paid for each unit of the input. Variance Analysis Cycle Prepare standard cost performance report Analyze variances Begin Identify questions Receive explanations Take corrective actions Conduct next period’s operations Exhibit 10-1
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A General Model for Variance Analysis Variance Analysis Price Variance Difference between actual price and standard price Quantity Variance Difference between actual quantity and standard quantity Variance Analysis Price Variance Quantity Variance Materials price variance Labour rate variance VOH spending variance Materials quantity variance Labour efficiency variance VOH efficiency variance A General Model for Variance Analysis Price Variance
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