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    STANDARD COSTING (Learning Insights)

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    Riel Berdigay
    The document discusses standard costing and its uses. Standard costs represent planned costs established before production and are goals for actual costs. Standard costs are accumulated along with actual costs and used for cost control, pricing, performance evaluation, cost awareness, and management objectives. Variance analyses compare actual to standard costs and include spending, efficiency, and production variances.

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    STANDARD COSTING (Learning Insights)

    Uploaded by

    Riel Berdigay
    16 views1 page
    The document discusses standard costing and its uses. Standard costs represent planned costs established before production and are goals for actual costs. Standard costs are accumulated along with actual costs and used for cost control, pricing, performance evaluation, cost awareness, and management objectives. Variance analyses compare actual to standard costs and include spending, efficiency, and production variances.

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    STANDARD COSTING (learning insights)

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    The document discusses standard costing and its uses. Standard costs represent planned costs established before production and are goals for actual costs. Standard costs are accumulated along with actual costs and used for cost control, pricing, performance evaluation, cost awareness, and management objectives. Variance analyses compare actual to standard costs and include spending, efficiency, and production variances.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    16 views1 page

    STANDARD COSTING (Learning Insights)

    Uploaded by

    Riel Berdigay
    The document discusses standard costing and its uses. Standard costs represent planned costs established before production and are goals for actual costs. Standard costs are accumulated along with actual costs and used for cost control, pricing, performance evaluation, cost awareness, and management objectives. Variance analyses compare actual to standard costs and include spending, efficiency, and production variances.

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    BERDIGAY, MARIEL E.

    ACC 222 COST ACCOUNTING


    LEARNING INSIGHTS

    STANDARD COSTING

    I have learned that standard costs represent the planned costs of a production and are
    generally established well before the production begins. Its establishment provides
    management with goals to attain and bases for comparison with actual results. These costs are
    also expected to be achieved in a particular production process under normal conditions.
    Standard costing is also concerned with cost per unit and serves basically the same purpose as
    a budget. Also, I've learned that standard cost does not replace actual cost in a costing
    accumulation system. However, both actual costs and standard costs are accumulated.

    I have also learned that the purpose of this cost is to control costs and promote efficiency. This
    cost is not compared to those in a higher position cost, but it is used with either job order or
    process costing to manufacture a product and the subsequent comparison of the actual costs
    with the established standard. It is also usually determined for a period of 1 year and is revised
    annually. And if the analysis during the year indicates that a standard is incorrect or any other
    related factors, management should not hesitate to adjust the standard accordingly.

    Standard cost can also be used for many different purposes. It should be noted that cost
    information which serves one purpose may not be appropriate for another. Therefore, the
    purpose for which cost information is to be used should be clearly defined before procedures
    are developed to accumulate cost data. Standard costs may be used for cost control, pricing
    decisions, performance appraisal, cost awareness, and management objectives.

    There are also three-factor analyses namely spending variance, efficiency variance, and
    production or volume variance. Spending variance is the difference between actual factory
    overhead and budgeted factory overhead on the basis of actual direct labor hours equals the
    price variance. Efficiency variance is the difference between actual direct labor hours worked
    and standard direct labor hours allowed multiplied by the standard variable factory overhead
    application rate equals the efficiency variance. And lastly, production variance is the same as
    the volume variance computed under the two-factor analysis. This also known as denominator
    variance because the variance is the result of production of an activity level different from that
    used as denominator to calculate the fixed factory overhead application rate.

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