IDEAL VERSUS NORMAL STANDARDS

IDEAL VERSUS NORMAL - Setting Standard Costs—A Difficult Task The setting of standard costs to produce a unit of product is a difficult task It

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Unformatted text preview: Setting Standard Costs—A Difficult Task The setting of standard costs to produce a unit of product is a difficult task. It requires input from all persons who have responsibility for costs and quantities . To determine the standard cost of direct materials, management consults purchasing agents, product managers, quality control engineers, and production supervisors . In setting the cost standard for direct labor, managers obtain pay rate data from the payroll department. Industrial engineers generally determine the labor time requirements. The managerial accountant provides important input for the standard-setting process by accumulating historical cost data and by knowing how costs respond to changes in activity levels . To be effective in controlling costs, standard costs need to be current at all times. Thus, standards are under continuous review. They should change whenever managers determine that the existing under continuous review....
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This note was uploaded on 11/08/2011 for the course ACCOUNTING ac 202 taught by Professor - during the Fall '11 term at Montgomery.

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IDEAL VERSUS NORMAL - Setting Standard Costs—A Difficult Task The setting of standard costs to produce a unit of product is a difficult task It

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