notes-c10 - C 10 STANDARD COSTS AND BALANCED SCORECARD...

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1 C 10 - STANDARD COSTS AND BALANCED SCORECARD notes-c10.doc Written by Professor Gregory M. Burbage, MBA, CPA, CMA, CFM © CHAPTER LEARNING OBJECTIVES: MAJOR: - Calculate all variances. - Explain what each variances means in non-technical language. - Internal Business Process Performance terminology and concepts (PVA, Value added, Non- value added, DCT, Throughput & MCE) MINOR: - Formulas for each variance. - Journal entries to record variances – Appendix 10A. MANAGEMENT BY EXCEPTION is where managers direct their attention to those areas that fall outside acceptable limits (standards). So to tell whether something falls outside acceptable limits, STANDARDS must be set. A STANDARD is a predetermined price and quantity of input for producing an output. For example, how much should the material cost and how much should be used to produce a unit, or several units. Technically, a STANDARD is a measure for one, where a BUDGET is a measure for many. (One versus total.) Often we will use the term standard to mean many, but keep in mind the true definition. IDEAL STANDARDS are not reachable and most managers don't like to use them because of this.
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notes-c10 - C 10 STANDARD COSTS AND BALANCED SCORECARD...

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