Chapter10SV

Chapter10SV - Standard Costs Standard ChapterTen(PartI)...

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Standard Costs Standard Costs Chapter Ten (Part I) Chapter Ten (Part I)
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Standard Costs Standard Costs Standards are benchmarks or “norms” for measuring performance. Two types of standards are commonly used. Quantity standards specify how much of an input should be used to make a product or provide a service. Cost (price) standards specify how much should be paid for each unit of the input.
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Standard Costs Standard Costs Direct Material Deviations from standard deemed significant are brought to the attention of management, a practice known as management by exception . Type of Product Cost Amount Direct Labour Manufacturing Overhead Standard
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Advantages of Standard Costs Advantages of Standard Costs Management by exception Advantages Promotes economy and efficiency Simplified bookkeeping Enhances responsibility accounting
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Potential Problems Emphasis on negative may impact morale. Emphasizing standards may exclude other important objectives. Favorable
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This note was uploaded on 12/31/2011 for the course ACCT 441 taught by Professor Johnvermeer during the Spring '08 term at Humber.

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Chapter10SV - Standard Costs Standard ChapterTen(PartI)...

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