Chapter 24. Standard Costing
Define standards and discuss how they are developed.
Explain the difference between actual, normal, and standard costing.
Understand the uses of standard costing.
Identify the three basic types of standards.
Explain the establishment of direct materials standards, direct labor standards, and factory overhead standards.
Differentiate between a static budget and a flexible budget.
Briefy discuss how standards are established for a more complex process cost or job order cost system.
Discuss quality and the measures that can be used to measure quality costs.
Explain the philosophy of the just‐in‐time (JIT) management strategy and its view of the factors that drive the cost of manufacturing.
Explain the role of variances in managing and evaluating costs.
Identify the types of variances that exist and discuss standard costing with respect to the computation and analysis of these variances.
Compute the direct materials price variance and the direct materials efficiency (usage) variance.
Calculate the direct labor price (rate) variance and the direct labor efficiency variance.
Compute factory overhead variances using the one‐, two‐, and three‐factor analysis methods.
The cost of manufacturing a product may be predetermined before production begins or computed when production is completed. A cost accumulation system (either job order costing or process costing) may therefore apply ...