BUS 215 Chapter 10: Chapter 10 Notes
Chapter 10 Notes
• Standard: a benchmark for measuring performance
o Ex: Sears sets specific labor time standards for job completions
o Quantity standards: specify how much of an input should be
used to make a product or provide a service
o Price standards: specify how much should be paid for each unit
of product
• Standard quantity per unit: defines the amount of direct materials that
should be used for each unit of finished product
• Standard price per unit: defines the price that should be paid for each
unit of direct materials and should reflect final, delivered costs of those
materials
• Standard hours per unit: defines the number of direct labor-hours that
should be used to produce one unit of finished goods
• Standard rate per hour: defines expected labor wage rate per hour,
including employment taxes and fringe benefits
• Spending variances = amount of actual results – amount of flexible
budget
• Price variance: difference between the actual amount paid for an input
and the standard amount that should have been paid multiplied by the
actual amount of input purchased
• Quantity variance: difference between how much of an input was
actually used and how much should have been used for the actual level
of output
find more resources at oneclass.com
find more resources at oneclass.com
