standard cost

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Fig. 78 Standard cost. Table showing the standard cost of an upholstered chair.

standard cost

an estimated product cost, prepared in advance of production, that shows what a product ought to cost given reasonably efficient working. Standard cost includes the direct materials cost of the product, direct labour cost and production overheads, as well as distribution, selling and administration overheads. Overheads are charged to products using an appropriate COST RATE derived by dividing budgeted overheads by budgeted output. Fig. 78 shows a simplified standard cost for a product. Such predetermined standard costs are used to provide a basis for price fixing and for cost control through VARIANCE ANALYSIS. See also DIRECT-LABOUR COST VARIANCE, DIRECT-MATERIALS COST VARIANCE, OVERHEAD-COST VARIANCE.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson
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Figure 1 shows the structure of standard costing systems.
Leaning away from standard costing: Lean companies need value stream costing and new performance metrics
The problem structure in the standard costing format in this paper similarly allows students to better model the real-world whereby a business chooses to use standard costing procedures, sets the standards and then measures the variances with actual results for the business.
An active learning approach to teaching variance analysis to accounting students
Let's revisit some basics of standard costing, remembering that P1 candidates are assumed to have brought forward all of their knowledge from their CO1 studies.
Performance operations: the key to splitting a total variance into its planning and operational components--a crucial Pt skill--is to find the planning variance first and then base your operational calculation on the revised standard
In this article, we present a research protocol for determining how mature lean manufacturers' use of standard costing compares to lean accounting theory.
Exploring the role of standard costing in lean manufacturing enterprises: a structuration theory approach
* The use of activity-based costing helps them to understand their operations better than standard costing.
During economic chaos, organizations must evolve--has your cost/profitability system (CPS) evolved? While a company's business model has likely evolved in response to the current dynamic economic climate, its CPS has failed to reflect these changes. Until the system is updated, the CPS will function inefficiently
In this way, standard costing "winds up creating a problem [by] giving off a signal that our costs are actually lower than they appear on the profit and loss statement," Medley said.
'Lean accounting' described as aid to manufacturing
the dislocations of war, especially shortages in the factors of production and capacity constraints, meant that such "scientific management" techniques as existed (standard costing, time-study, specific detailing of task routines) fell by the wayside.
The impact of World War II on cost accounting at the Sperry Corporation
However, the authors fail to address several key topics, including the alternatives and limitations of standard costing and new nonfinancial measurements.
Managerial Accounting. (Book Reviews)
And standard costing compares predicted against actual costs to identify areas that vary significantly from the forecasted costs of performing a task.
More Complex, More Robust: Activity-based costing systems are harnessing the internet and adding new functionality, giving companies more horsepower than ever. (Activity-based Costing)
The resulting correlation coefficient indicates no relationship between the production environment and the use of standard costing. This lack [TABULAR DATA FOR FIGURE 1 OMITTED] [TABULAR DATA FOR FIGURE 2 OMITTED] of correlation suggests that many companies are using a standard cost system in an environment that may not be applicable.
The role of management accounting in the development of a manufacturing strategy
The ultimate goal of Alberta Health is to develop a prospective, case-based funding system, using standard costing methodologies across the province.
Utilization management in Alberta's new funding environment
These include planning, budgetary control, standard costing, financial statements and ratio analysis.
Cost management: key to competing in foreign markets

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