MANAGERIAL ACCOUNTING F/MGRS.
MANAGERIAL ACCOUNTING F/MGRS.
6th Edition
ISBN: 9781264100590
Author: Noreen
Publisher: RENT MCG
Question
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Chapter 10, Problem 10.1Q
To determine

 

Concept introduction:

The standard costing is applied to record the costs at standard or budgeted amounts along with their actual amounts and variances. The standard costing allows the presentation of actual cost and their variances together. 

To indicate: the meaning of a quantity standard and a price standard 

Expert Solution & Answer
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Explanation of Solution

Under the standard costing, the costs are recorded at their standard costs. The variances are calculated by comparing the standard costs and actual costs. The standards are defined for each type of cost. These standards are quantity standard and price standards.

A quantity standard indicates the standard quantity of a particular item required for the production of one unit, for example, pound of raw material required for the production of one unit of the final product.

A price standard indicates the standard price or rate of a particular item required for the production of one unit, for example, the price per pound of the raw material.

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