Accounting › Section U · Standard costs and variances › Topic U.1
Developing standard costs
A standard cost says what one unit of product ought to cost when work goes as planned. Setting it carefully gives managers a yardstick for budgets, prices and every variance in this section.
In this topic
- What a standard is
- Why companies set standards
- Ideal versus attainable standards
- Setting price standards
- Setting quantity standards
- Standards for overhead
- Worked example: Pellworth's standard cost card
- Standard quantities allowed for actual output
- Worked example: Pellworth's March output
- Keeping standards current
- Common mistakes to avoid
- Key takeaways
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