What are standard costs? And what are they used for?
are pre determined costs for our products that are used to evaluate performance
How are standard costs used in variance analysis?
Standard cost variance analysis decomposes spending variances from the flexible bud- get into two elements—one due to the price paid for the input and the other due to the amount of the input that is used.
Why is it important to seperate a spending variance into its two components?
To see how much each variance made and to see whos responsible for each component.
What are the two direct material variances and who’s responsible for them?
Materials price variance would be the purchasing department manager and Quantity variance and that is the responsibility of the production manager.
What are the two direct labor variances and who’s responsible for them?
HE RATE VARAIANCE AND RESPONSIBILITY OF HR and EFFICIENCY VARIANCE AND DIRECT LABOR SUPERVISOR