Industrial Accounting
Standard costing:
Standard costing is a natural consequence of the application of budgetary control. In budgetary control, the actual results of the operation of a circle are compared with the planned results, while in standard costing, the actual results of production and sales of a product are compared with the planned results. They measure it.
Standard costing is a method for determining costs according to which statistics are prepared including the following information:
a) Standard cost
b) Actual cost
c) The difference between the standard cost and the actual cost, which is called the discrepancy or deviation from the standard.
In the standard costing method, the estimated cost price and then the actual performance is compared with it, and the causes of this discrepancy are investigated and analyzed.
Standard Costs > Actual Costs = Favorable Deviation
Standard Costs < Actual Costs = Adverse Deviation The cost standard for each of the following cost factors must be determined separately: A) raw materials (direct) b) Direct wages c) Variable overhead d) Fixed overhead Material Deviation: A) material rate deviation (material price) = actual amount (standard rate - actual rate) b) material consumption deviation (material amount) = standard rate (standard consumption - actual consumption) c) total deviation of materials = deviation of consumption - deviation of rate Wage deviation: A) Wage rate deviation = actual hours (standard rate - actual rate) b) Wage efficiency deviation = standard rate (standard hours - actual hours) c) total wage deviation = wage efficiency deviation - wage rate deviation Overhead Deviation: A) volume deviation = standard fixed overhead rate (standard hours - normal capacity) for real production, real production time of the company b) Controllable deviation = (standard overhead - actual overhead) Standard overhead = (normal capacity * standard fixed overhead rate) - (standard hours * variable costs) Actual overhead = (actual variable overhead + actual fixed overhead) J ) Total Overhead Variance = Controllable Variance - Volume Variance (Standard Capacity * Standard Rate) - (Standard Hours * Variable Costs) The basis of the standard costing system is that the real costs of production in the accounts replace the costs in specific conditions of production and future work. In this way, standard costing is called pre-estimated costs, which determines exactly what the production cost of a product unit should be. continues. publish This post is written by sfhjhygfrhesabhaseb