AFM102 Lecture Notes - Lecture 14: Standard Streams
14 Mar 2017
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Chapter 10: standard costs and overhead analysis (variance analyses) Quantity - how much of an input should be used to make a unit of product or provide a unit of service. Cost/price standards - how much should be paid for each unit of the input (cid:522)ideal standards(cid:523) - no breakdowns, shortages, strikes, etc. (cid:522)practical standards(cid:523) - take into consideration problems that likely occur. Purchase price per kg * (1-discount) + shipping cost + handling cost. =. 50 * (1-0. 08) + 0. 30 + 0. 04. Material required + allowance for waste + allowance for rejects. Nary buys quilted blankets from mrs martin. Each finished blanket contains 2 metres of cloth. There is unavoidable waste of 20% (calculated on standard input quantity) of cloth when the cloth is cut for assembly. The cost of cloth is per metre. What is the standard direct material cost for cloth per blanket: . 20, . 00, . 00, . 50, . 00. 2 meters / 80% = 2. 5 metres.
