standard costing -...
TRANSCRIPT
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Standard Costing
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The purpose of standard costing
Standard Costing is a
control tool for management.
Standard Costs are
collected on a standard cost
card. They may be based on
Absorption Costing or
Marginal Costing.
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Advantages and Disadvantages of Standard Costing
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Types of standard
Types of Standards
Ideal
What would be expected under perfect operating conditions
Basic
A standard left
unchanged from
period to period
Current
A standard adjusted for specific issues relating to the current
period
Attainable
What would be
expected under
normal operating
conditions
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Sales Volume Variance Marginal costing
Budgeted sales
Actual sales
Standard contribution
per unit
Absorption costing
Budgeted sales
Actual sales
Standard profit
per unit
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Sales Price Variance Budgeted
selling price
Actual selling price
Actual quantity
sold
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Direct Materials Variances
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Direct Labour Variances
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Variable Overhead variances
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Fixed Overhead Variances
Fixed Production Overheads Total Variance
Marginal Costing
Expenditure
Variance
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Fixed Overhead Variances
Fixed Production Overheads Total Variance
Absorption Costing
Expenditure
Variance Volume
Variance
Efficiency
Variance
Capacity
Variance
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Fixed Overhead Variances
Under- or over-absorption of overheads
Absorption Costing
Budgeted Fixed
Overhead
–
Actual Fixed
Overhead
(Actual Production in
standard hours × OAR)
– Budgeted FOH
(Actual hours
taken – standard
hours for output
achieved) × OAR
(Actual Hours
worked –
budgeted hours
worked) × OAR
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Causes of Variances
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Causes of Variances
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Performance measurement
techniques
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Financial performance – profitability
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Financial performance - liquidity
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Financial performance - risk
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Non Financial performance
Quality
• Wastage
• Customer satisfaction
• Growth in sales
• Product improvements
• Job satisfaction
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Balanced scorecard
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Benchmarking
Benchmarking
Internal
Competitive
Functional
Strategic
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Performance measurement
in specific situations
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Divisional performance
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Manufacturing industries
Contract costing
Job costing
Batch costing
Process costing
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Service sector Financial
Revenue per product group
Staff costs as a % of revenue
Space costs as a % of
revenue Market share
Current ratio
Quality
Customer surveys
Management inspections
Fault monitoring
Quality control
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Non-profit and public sector
Value for Money
Effectiveness
Efficiency
Economy
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Spreadsheets
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Uses of spreadsheets
Uses
Budgets
Variances
What-if
Reports
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Presenting information
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Report Format
• Title
• Introduction
• Analysis
• Conclusion
• Appendices
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Simple bar chart
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Component bar chart
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Compound (multi) bar chart
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Line chart
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Pie chart