Access Millions of academic & study documents

Application of variance analysis

Content type
User Generated
Type
Study Guide
Showing Page:
1/17

Sign up to view the full document!

lock_open Sign Up
Showing Page:
2/17

Sign up to view the full document!

lock_open Sign Up
Showing Page:
3/17

Sign up to view the full document!

lock_open Sign Up
End of Preview - Want to read all 17 pages?
Access Now
Unformatted Attachment Preview
COSTS & VARIANCE ANALYSIS INTRODUCTION This document focuses on two related topics: the development and use of standard costs, and the calculation and interpretation of variances, i.e. the analysis of deviations from those standard costs in the actual results. STANDARD COSTS Definition and Purpose of Standard Costs A standard cost is a carefully predetermined cost. Narrowly defined, it is the estimated cost to manufacture a single unit of a product or to perform a single service. More broadly defined, it is the estimated cost of a product, job, project, or operation, including manufacturing, selling, and administrative costs. A budgeted cost is a standard cost multiplied by a volume figure. In other words, a standard cost is a unit cost while a budgeted cost is a total amount, although the terms are often used interchangeably. Because standard costs are incorporated into budgeting systems, they play a key role in the planning, control, motivation, and performance evaluation functions of management. Having predetermined costs provides timely information to help managers plan and make decisions about product emphasis, bidding, and pricing, since such decisions often have to be made before production is complete. For control purposes, standard costs allow for a detailed analysis of variances between actual performance and budgeted performance, to determine where inefficiencies or problems exist. Because standard costs provide concrete targets that employees can aspire ...
Purchase document to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.
Studypool
4.7
Indeed
4.5
Sitejabber
4.4