Standard Costs

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Distinguish between a standard and a budget.

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Identify the advantages of standard costs.

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Describe how standards are set.

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State the formulas for determining direct materials anddirect labor variances.

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State the formulas for determining manufacturing overheadvariances.

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Discuss the reporting of variances.

Our Focus

 

 

The Need for Standards

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Standards

•Are common in business•Are often imposed by government agencies (andcalled regulations)

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Standard costs

•Are predetermined unit costs•Used as measures of performance