AC100_Lecture7-8_COMPLETE LECTURE SLIDES.pdf

Price standards final delivered cost of materials

Info icon This preview shows pages 20–32. Sign up to view the full content.

Price Standards Final, delivered cost of materials
Image of page 20

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Setting Direct labour Standards Rate Standards Use wage surveys and labour contracts. Time Standards Use time and motion studies for each labour operation.
Image of page 21
Standards must develop to respond to rapid changes in Digital world Standards must be consistently revised when there is: Sudden increase in the price of materials due to a rapid increase in global market prices (e.g. the price of oil or other commodities) Change in working methods and procedures that alters the expected direct labour time for a product or service. Design specifications of materials used to make a product or provide a service Unforeseen changes in the rate of pay to the workforce.
Image of page 22

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Standard Cost Card Variable Production Cost A standard cost card for one unit of product might look like this: A A x B Standard Standard Standard Quantity Price Cost Inputs or Hours or Rate per Unit Direct materials 3.0 kgs 4.00 £ per kg 12.00 £ Direct labour 2.5 hours 14.00 per hour 35.00 Variable mfg. overhead 2.5 hours 3.00 per hour 7.50 Total var standard unit cost 54.50 £ B
Image of page 23