Management and Organizational Studies 3370A/B Chapter Notes - Chapter 10: Standard Cost Accounting, Purchasing Manager, Statistical Process Control

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 3370A/B
• Professor: Bill Dawson

Document Summary

Standards are benchmarks or "norms" for measuring performance: 2 types of standards are commonly used, quantity standards. Specify how much of an input should be used to make a product or service: cost (price) standards. Setting direct material standards: standard price per unit. Should include allowance for normal inefficiencies- breaks, machine downtime, cleanup, rejects. Setting variable manufacturing overhead standards: price standards, the rate is the variable portion predetermined overhead rate, quantity standards, the quantity is the activity in the allocation base used to calculate the predetermined overhead, standard cost per unit. Standard quantity/hours x standard price/rate for each cost element. Raw material purchases may be held in inventory for a period of time before being used in production. Labour rate variance voh: quantity variance, difference between actual quantity and standard quantity, materials quantity variance, voh efficiency variance. Labour efficiency variance: actual quantity- the amount of direct materials, direct labour, and variable manufacturing overhead actually used.