ACCT 2230 Chapter 10: ACCT Chapter 10
22 Nov 2016
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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 signi cant are brought to the attention of management as. Exceptions : variance analysis cycle basic approach to identifying and solving problems, begin with preparing standard cost performance report, analyze variances, identify questions, receive explanations, take corrective actions, conduct next period operations. Who uses standard costs: manufacturing, service, food and non-pro t organizations all use standards to some extent, manufacturing companies often have highly developed standard costing systems relating to materials, labour, and overhead. Ideal standards: standards that allow for no machine breakdowns or other interruptions and that require peak ef ciency at all times. Practical standards: standards that allow for normal machine downtime and other work interruptions and can be attained through reasonable, although highly ef cient, efforts by the average employee.
