Standard Costing - prepared for each cost unit It has...

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Dean Search Managerial Accounting 4 December 2011 Summarize your understand of standard costs and their useful to management based on article. After reading the article in its entirety I have come to the conclusion that standard costing is often over-used as a decision making tool. As a result, the majority of companies have begun to fade away from the use of the standard costing method as their main tool for pricing and global supply chain sourcing decisions. However, it is essential for one to know the primary components of standards costs. Standard costing is defined as the control technique that reports variances by comparing actual costs to pre-set standards. Standard cost is a predetermined unit cost, which is
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Unformatted text preview: prepared for each cost unit. It has details of the standard amount and price of each resource that will be utilized while providing the service. Standards costs should be updated on an annual basis and even more so during times of turbulence. The level of absorption in standards cost is motivated a company’s behavior around cost management. Research has clearly demonstrated that as much as fifty percent of management; do not trust the information that is presented to them. In order to improve your business intelligence you need to evaluate the relevance, timeliness and consistency of your standard cost information....
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