ACCT20200 Chapter Notes - Chapter 10: Variable Cost

• School: ND
• Department: Accountancy
• Course: ACCT20200
• Professor: O' Tousa

Document Summary

When quantity of materials purchased does not equal the amount. Standard costs are a key element in a management by exception approach. If costs conform to the standards, then managers can focus on other issues: 2. Standards that are viewed as reasonable by employees can promote economy and efficiency. Provide benchmarks that individuals can use to judge performance: 3. Instead of recording actual costs, standard costs can be charged to jobs: 4. Standard costs fit naturally in an integrated system of responsibility accounting . Establish what costs should be, who should be responsible for them, and whether actual costs are under control. Standard cost variance reports are usually prepared on a monthly basis and often are released days or even weeks after the end of the month. If managers use variances only to assign blame and punish subordinates, morale may suffer. If labor works faster, output will go up: assume that labor is a variable cost, 4.