STANDARD COST AND VARIANCE ANALYSIS

Standard Cost

- What should the company incur?

- Multiplied with the actual level of activity

Variance Analysis

- This is the time when we compare the standard

that we set from the beginning of the period
with the actual during the period of revaluation.
If may difference, we call it variance.
- We only investigate variance that is material

Standard Cost System

- A company employs standard cost system kasi

mabilis siya. Example if 1,000 units ang ino-order
natin and standard cost system ang gamit natin,
automatically u know the standard cost and
multiply it with the number or units to
immediately know the dealing price mo sa
customers mo.
- Materials, labor and OH ay pare-parehas pre-
determined, kaya we expect na yung Materials,
labor and OH would be different from the
standard.

SOURCES OF STANDARD COSTS

Activity Analysis

- They analayzed the activity, kung ano talaga

yung nature ng activity, kung gaano karami yung
materials needed, labor or OH.
- Normally, ang gumagamit nito ay yung mga
companies na hindi pare-parehas yung products
or services na pino-provide. Kaya kada activity,
mine-measure nila kung ilang M, L, OH ang
needed.

Historical Data

- Least expensive way of setting the standard

Benchmarking

- You try to look sa ibang company ng standard na

gusto mong i-employ sa company mo.

Target Costing

- You are really considering the market pricing.