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define a standard cost and explain what constitutes the components of a standard cost.  Describe the advantages and disadvantages of a standard cost system and explain under what circumstances a standard cost system is most effective.

Feb 20th, 2015

define a standard cost

An estimated or predetermined cost of performing an operation or producing a good or service, under normal conditions

explain what constitutes the components of a standard cost.

estimates of standard quantities of inputs, and budgeted prices of those inputs

Describe the advantages -------provides a yardstick for performance evaluation.

minimizes the wastage by detecting variance and suggesting for corrective actions

encourages reappraisals of methods, materials and techniques that help to reduce the unfavorable variances

and disadvantages of a standard cost system

lack of flexibility

skews profitability

Feb 20th, 2015

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