CHAP 9 Flashcards
(30 cards)
standards are what
performance goals
standard cost includes
direct materials
foh
direct labor
what are standard cost systems?
they use standards for product costs
standard costs systems enable management to determine what?
standard cost
actual costs
types of standards
ideal
normal
ideal stanards
only achieved with perfect conditions
normal standards
attained with reasonable effort
allow for normal production difficulties and mistakes
employees focus more on cost and are more likely to put forth best efforts
standard costs should be reviewed how often
periodically
standard costs should not be revised because why
they differ from actual costs
standard costs should be revised when?
when prices, designs, rates, or manufacturing methods change
standards limit operating improvements by doing what?
by discouraging improvement beyond the standard
standards are too difficult to maintain when?
in a dynamic manufacturing environment, resulting in “stale standards”
standards can cause employees to lose sight of
the larger objectives of the organization by focusing only on efficiency improvement
budgetary performance evaluation compares what
actual performance against its planned budget
formula to find standard cost per unit for direct materials, labor, and foh
budgetary performance evaluation= standard price * standard quantity
what 2 components can the standards for direct materials, labor, and foh be separated into?
standard price and standard quantity
what is cost variances?
difference between actual and standard costs
when is a variance unfavorable?
when the actual is more than the standard
when is a variance favorable?
when actual is less than standard
what is a total manufacturing cost variance?
difference between total standard costs and total actual costs
total direct material variance is separated into what
a price and quantity variance
actual direct materials cost formula
actual price * actual quantity
total direct labor variance is separated into what
a rate and time variance
formula to find actual direct labor cost
actual rate * actual time
