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Chapter 10 Study Guide Standard costs and variance analysis Chapter theme: This chapter extends our study of management control by explaining how standard costs are used by managers to control costs

How to fill out standard costs and variance

How to fill out standard costs and variance

1. Step 1: Collect data on all the costs associated with producing a product or providing a service.
2. Step 2: Identify the standard cost for each element such as direct materials, direct labor, and overhead.
3. Step 3: Compare the actual costs incurred with the standard costs to identify variances.
4. Step 4: Analyze the variances to determine the reasons for deviations from standard costs.
5. Step 5: Take corrective actions to eliminate or reduce the variances.
6. Step 6: Review and update the standard costs periodically to ensure they reflect the current production environment.

Who needs standard costs and variance?

1. Manufacturing companies that want to monitor and control their production costs.
2. Service providers who want to measure the efficiency of their operations and identify areas for improvement.
3. Financial analysts who require accurate and reliable cost data for cost analysis and decision-making.
4. Companies that want to compare their actual costs with the industry standards and benchmarks.
5. Organizations that want to implement cost control measures and improve profitability.

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What is standard costs and variance?

Standard costs are predetermined costs that companies expect to incur in producing goods or services, while variance is the difference between standard costs and actual costs.

Who is required to file standard costs and variance?

Companies in the manufacturing industry or any company that uses standard costing methods are required to file standard costs and variances.

How to fill out standard costs and variance?

Standard costs and variances are typically filled out using data from the company's accounting records and production reports.

What is the purpose of standard costs and variance?

The purpose of standard costs and variances is to help companies analyze their cost structures, identify inefficiencies, and make more informed decisions.

What information must be reported on standard costs and variance?

Standard costs and variances report information such as budgeted costs, actual costs, and the reasons for any variances.