Lecture 4

Question 1

What is a standard cost?

How do we set standard costing? ( 3 things )

Are standard cost the same as budget costs?

Answer 1

• it tells you how much something should cost if everything goes to plan
• e.g your baking a cookie
  The flour cost 1.00
• the sugar cost 50p
• the cookie cost 1.50
• so all together it cost 3 - that’s if everything goes to plan.

Set it
1. Seeing how much matierlas you need to make one cookie
2. Standard time allowed : how long it takes to make one cookie
3. Matierls prices : choose specific cheap flour and specific store

• standard = how much it cost to make 1 cookie The flour
  Budget = how much it ocst to make a bunch of cookies

Question 2

How do you workout sales variance
Like seeing the actual price and standard price the difference

Using this example
- abc planned to sell and make 12,000 products in one month
- materials 5kg for 16
- labour 6 hours / 10 per hour
- fixed overheads 360,000 / 12,000 units
Standard selling price per unit : 230

They made only 10,000 units
Actual selling price per unit : 240

What is the formula?

Answer 2

( Actual price - standard price ) x actual quantity sold

240-230 x 10,000=-100,000

Question 3

How do we workout if we spent more on matierls or use more or less materials

How do we workout labour cost and labour variant?

What about fixed overhead?

Answer 3

( Standard - actual ) x actual

• for matierls then you add them both up to see if adverse or favourable
• labour cost and hour we add them both up and see if it adverse of variable

Fixed overhead = look at how much we spent before and after if it less thean it’s favourable if we septet more than its adverse

Question 4

What are reasons for variances going up or down?
( being good or bad )

Answer 4

1. Prices changes
2. Workers performance
3. Wasted materials

Question 5

For this lecture to understand it depth go on ChatGPT on the other account.