MGMT 30B Lecture 13: Lecture 13
8 Jun 2016
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A. 1) advantages of using standard cost systems: helps identify when we have a difference. A. 2) disadvantages of using standard cost systems: information might be outdated: types of standards. How much of an input should be used to make a product or provide a service. How much should be paid for each input. Quantity standard: how much raw materials are required to produce one unit of finished goods. Price standard: price per unit for direct materials (b. 3. a. ii) Quantity (or time) standards: standard hours per unit. Price standards: standard rate per hour (b. 3. a. iii) Price standards: standard cost per unit (b. 3. b) Standard quantity (based on actual output) at standard price (sq x sp) box 1 (b. 3. b. ii) Actual quantity (based on actual output) at standard price (aq x sp) box 2 (b. 3. b. iii) Actual quantity (based on actual output) at actual price (aq x ap) box 3. Quantity variance = standard price x (actual quantity standard.
