RSM222H1 Chapter Notes -Earnings Before Interest And Taxes, Sunk Costs, Income Statement
Document Summary
Management by exception a system in which standards are set for operating activities which are periodically compared to actual results. Standard cost card a detailed listing of the standard amounts of materials, labour, and overhead that should go into a unit of product, multiplied by the standard price for each. Ideal standards those that can be attained only under the best circumstances. Few firms use these, because large variances can be normal and it discourages workers. Practical standards tight but attainable, which allow for machine downtime and employee rest. It can also be used to forecast cash flows and plan inventory. Standard price per unit the price for a single unit of materials that includes allowances for quality, quantitiy, shipping, and net of any other discounts. Standard qty per unit the amount of material going into each unit of finished product, accounting for unavoidable waste, spoilage, an dohter inefficiencies.
