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Unformatted text preview: Standard Costs When budgets are prepared, the costs are usually computed at two levels, in total dollars so an income statement can be prepared, and cost per unit. The cost per unit is referred to as a standard cost . A standard cost can also be developed and used for pricing decisions and cost control even if a budget is not prepared. A standard cost in a manufacturing company such as Pickup Trucks Company consists of per unit costs for direct materials, direct labor, and overhead. The per unit costs can be further divided into the expected amount and cost of materials per unit, the expected number of hours and cost per hour for direct labor, and the expected total overhead costs and a method for assigning those costs to each unit. Within the expected amount of materials, waste or spoilage must be considered when determining the standard amount. For example, if a product, such as a chair, be considered when determining the standard amount....
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This note was uploaded on 11/16/2011 for the course ACCT 2310 taught by Professor Staff during the Spring '09 term at Texas State.
- Spring '09