BUSACC 0040 Chapter Notes - Chapter 10: Fixed Cost, Management Accounting, Variable Cost
23 Apr 2018
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Standard costs setting the stage: standard: a benchmark for measuring performance, ex: your doctor evaluates your weight using standards for individuals of your age, height, and gender. If the actual costs incurred is < the standard cost allowed for the actual level of output, variances would be favorable (f) If the standard cost allowed for the actual output is < the standard cost allowed for the planned output, variances would be favorable (f) If the actual level of activity been greater than the planned level of activity, all of the computations would be resulted in positive numbers and unfavorable (u) activity variances. It is important to distinguish between deviations from price standards (purchasing manager) and deviations from quantity standards (production manager: 1. The spending, price and quantity variances are computed exactly the same way regardless of whether one is dealing with dm, dl, or vmoh.
