Lec#9_Ch10 - Standard Costing Lecture #9 (Chapter 10) Dr....

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1 Standard Costing Lecture #9 (Chapter 10) Dr. Minlei Ye 1 Learning Objectives • Explain how standards are set • Understand General model for variance analysis Calculate DM DL overhead price • Calculate DM, DL, overhead price and quantity variances • Interpret the variances 2 Standards vs. Budgets Are standards the same as budgets? A budget is set for total costs. A standard is a per unit cost. Standards are often used when preparing budgets.
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2 Standard Cost Card – Variable Production Cost for one unit AA x B Standard Standard Standard Quantity Pric Cos B Price Cost Inputs or Hours or Rate per Unit Direct materials 10 board feet 5.50 $ per bf 55.00 $ Direct labor 2 hours 15.00 per hour 30.00 Variable mfg. overhead 2 hours 3.00 per hour 6.00 Total standard unit cost 91.00 $ Variance Analysis Cycle Identify questions Receive explanations Take corrective actions Exhibit 10 1 Prepare standard cost performance report Analyze variances Begin Conduct next period’s operations A General Model for Variance Analysis
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Lec#9_Ch10 - Standard Costing Lecture #9 (Chapter 10) Dr....

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