Management by exception: A system of management in which standards are set for various operating
activities that are then periodically compared to actual results. Any differences that are deemed significant are
brought to the attention of management as "exceptions."
Standard cost record: 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 or rate that has been set for each cost
Ideal standards: Standards that allow for no machine breakdowns or other work interruptions and that require
peak efficiency at all times.
Practical standards: Standards that allow for normal machine downtime and other work interruptions and can
be attained through reasonable, although highly efficient, efforts by the average employee.
Standard price per unit: The price that should be paid for a single unit of materials, including shipping,
receiving, and other such costs, net of any discounts allowed.
Standard quantity per unit: The amount of materials that should be required to complete a single unit of
product, including allowances for normal waste, spoilage, and other inefficiencies.
Standard rate per hour: The labour rate that should be incurred per hour of labour time, including
Employment Insurance, employee benefits, and other labour costs.
Standard hours per unit: The amount of labour time that should be required to complete a single unit of
product, including allowances for breaks, machine downtime, cleanup, rejects, and other normal inefficiencies.
Standard cost per unit: The standard cost of a unit of product as shown on the standard cost card; it is
computed by multiplying the standard quantity or hours by the standard price or rate for each cost element.
Variance: The difference between standard prices and quantities and actual prices and quantities.
Standard quantity allowed: The amount of materials that should have been used to complete the period's
output, as computed by multiplying the actual number of units produced by