RSM222H1 Chapter Notes - Chapter 10: Standard Cost Accounting, Variable Cost, Weighted Arithmetic Mean
Document Summary
Any differences that are deemed significant are brought to the attention of management as (cid:1688)exceptions(cid:1689): step 1: prepare standard cost performance reports (they highlight variances differences between actuals and standards, goal = improve operations not assign blame. The cost is calculated by multiplying the standard quantity of each input required to produce one unit of output by the price or rate for that input. Ideal standards: standards that allow for no machine breakdowns or other work interruptions that require peak efficiency at all times. Some managers think they have motivation value and even though employees will rarely meet the standard it is a reminder of the need for increasing efficiency and effort. Most managers feel they are discouraging for even the most diligent workers. Variances from the standards have little meaning large variances from ideal are normal making it difficult to manage by exception.
