TOPIC 5- AF09101 -Std costing and Varance analysis - 5-1.pdf

TOPIC 5- AF09101 -Std costing and Varance
analysis - 5-1.pdf




AF09101
ACCOUNTING FOR DECISION MAKING

Topic – 5

Standard Costing and Variance Analysis

,DAY 6

, OBJECTIVES
1. To understand how standard costing are
set and operate
2. To identify and describe the
purposes/benefits of standard costing and
variance analysis and their limitations
3. To calculate labour, material, overhead
variances and explain causes of variances
4. To calculate material price planning and
material price operational variances
5. Apply variance analysis in making decision

, Meaning of standard costing
Standard – criterion defined by set of
conditions
.
Standard cost is a scientifically predetermined
costs arrived at assuming a particular level of
efficiency in utilising materials, labour, and
overheads

The planned unit cost of the product,
component or service produced in a period
Standard costing can be defined as the preparatio
Standard cost are not budgeted costs. while of standard costs and applying them to measure th
budgeted costs relate to an entire activity or variances from actual costs and analyzing the
operation; standard costs represent the same causes of variations, with a view to maintain
information on a per unit basis maximum efficiency in production

It is a control system that measures an
variances from standard

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