Notes Chapter 10: Standard Cost and the Balanced Scorecard I. Standard Costs—Management by Exception a. Standard: benchmark or “norm” for measuring performance b. Quantity Standards: specify how much of an input should be used to make a product or provide a service c. Cost (price) Standards: specify how much should be paid for each unit of the input d. Management by Exception: the process of checking to make sure that actual costs and quantities of inputs do not depart significantly from standards e. 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. II. Setting Standard Costs
This is the end of the preview. Sign up
access the rest of the document.