Types of Standard & Revision

Procedure of setting standard cost :

Material

Labour

Overhead

Advantages

Limitations

No standards or goals so cost reduction isn’t an option.

Labour hours required.

Ordering cost

AP=actual price

SQ=standard quantity for actual output

AR=actual rate

SH=standard hours

Fixed overhead volume variance.

Variable overhead expenditure variance.

Cost control

Right decisions

Eliminating inefficiencies

The process of setting standard is a difficult task, as it requires technical skills.

There are no inset circumstances to be considered for fixing standards.