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Standard Costing: Theory (Input standards: (Material: a)study input q…
Standard Costing: Theory
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Input standards:
Material: a)study input q b)Determine best material based on specs & quality c)Purchases dept must find best prices for best quality
Labour: a)Study operation to determine allowable time b)Find best prod method c) Calc std hours incl normal stoppages
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Standard hours worked: a)Can't measure output in units if dept prod several products b)Measure in std hrs
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Purposes of standard costing: a)Prediction of future costs for dec making b)Motivational target c)Reliable & convenient source for budgeting d) Control system to identify and respond to areas of attention e)Simplfies cost tracing