Notes Chapter 10: Standard Cost and the Balanced ScorecardI.Standard Costs—Management by Exceptiona.Standard: benchmark or “norm” for measuring performanceb.Quantity Standards: specify how much of an input should be used to make a product or provide a servicec.Cost (price) Standards: specify how much should be paid for each unit of the inputd.Management by Exception: the process of checking to make sure that actual costs and quantities of inputs do not depart significantly from standardse.Variance analysis cycle: standard cost performance reports are prepared, variances are highlighted, questions are asked, root causes for the variance are uncovered, corrective actions are taken.e.i.Manufacturing, service, food, and not-for profit organizations use standards to some extent.f.Standard Cost Card: shows the standard quantities and costs of the inputs required to produce a unit of a specific product.
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