Textbook Notes (363,688)
Canada (158,529)
Accounting (242)
ACCT 2230 (113)
Chapter 10

Chapter 10 Managerial Accounting Notes

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ACCT 2230
Elliot Currie

Chapter 10 Accounting NotesStandard CostsOverhead AnalysisStandard CostsManagement by ExceptionStandard A benchmark or a norm for measuring performance Quantity and cost standards are set for each major input such as raw material and labour time If actual costsquantity differs significantly from standards managers will investigate to find cause of problem and eliminate itManagement by ExceptionVariance Analysis Cycle the basic approach to identifying and solving problemsWho Uses Standard Costs Manufacturing service food and not for profit organizations all make use of standardsStandard cost card 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 elementSetting Standard Costs Setting pricequantity standards ideally combines the expertise of everyone who has responsibility for purchasingusing inputs Standards should be designed to encourage efficient future operations not a repetition of pastIdeal Vs Practical StandardsStandards tend to fall into 2 categoriesIdeal Standards those that can be attained only under the best circumstances Allow for no machine breakdowns or other work interruptions Call for a level of effort that can be attained only by the most skilledefficient employees workingat peak effort 100 of the time Most managers feel that ideal standards tend to discourage even th most diligent workers Large variance from ideal standard are normalPractical Standards are defined as standards that are tight but attainable Allow for normal machine downtime and employee rest periods Variances typically signal a need for management attention bc fall outside of normal operating conditionSetting Direct Materials StandardsStandard price per unit The price that should be paid for a single unit of ma
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