ACCT 1B Lecture 20: Acct_1B_Lecture_20
16 Jun 2020
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Dm price standard: cost per unit of dm that should be incurred based on purchase department best estimate of the cost of raw materials. Have to include costs of receiving, storing, handling. Dm quantity standard: quantity of dm should be used per unit of fg. Need to consider quality and quantity of material, should include allowance for waste and normal spoilage. The standard dm cost per unit is the standard dm price x standard dmq. Direct labor price standard: rate per hour should be incurred is current wage rate adjusted for anticipated changes such as cost of living in union contracts. Dl quantity standard: the time it should take to make one unit. Allowances should be made for rest periods, cleanup, machine setup and downtime. Standard dl cost = standard dl rate x standard dl hours ( x 2 hrs. ) Manufacturing oh predetermined oh rate is used in setting the standard. Estimated activity; determine fixed rate and variable rate.
