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10/18/2011 ? Standard costing is primarily a cost crack technique. ? Its main purposes ar to issue bases for accommodate through version accounting. ? It may be used for evaluation of storage and WIP and in some cases, for fixing selling prices. ? chthonian this, a variance report, which reconciles the bud drag profit with constructive profit, is placed before the management with explanations for variances. ? The true format for insurance coverage variances depends upon the exact requirement based on the nature of the crossroad and the size of the organization. ? Standard A specimen is a influence measurable quantity set in delimitate conditions against which actual performance can be compared, usually for an component of work, operation, or activity. ? Standard Cost Standard cost is a pre-determined retardent of how much be should be under specified on the job(p) conditions. 1 10/18/2011 ? Basically there are deuce groups of standar ds: ? Quantity standards foundation garment: engineering and practiced specifications ? Price standards. Basis: forecast of market trends ? ? ? Provides a unremitting social unit of amount of actual performance.

In the absence of standard cost, actual costs are compared with the actual costs incurred in a previous period which provides a very unsatisfactory criterion for cadence performance. Quantity standards provide a constant and unchanging unit of measurement as correctly established standards need revisal only if the product itself or the methods of production or the fictitious charact er of materials used consume changed. Stand! ard costing facilitates Management by exception. This principle assumes that performance which meets the standard does not require management attention. ? Standards provide a need force necessary to achieve mellow performance. Attainable standards instigate workers to achieve or surpass the equal because they know any(prenominal) performance below standard impart have to be explained. Many plans for rewarding workers,...If you want to get a honorable essay, order it on our website: BestEssayCheap.com

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