{"id":4118,"date":"2014-05-08T18:23:47","date_gmt":"2014-05-08T18:23:47","guid":{"rendered":"http:\/\/www.marketingteacher.com\/standard-costing\/"},"modified":"2015-07-02T17:52:43","modified_gmt":"2015-07-02T17:52:43","slug":"standard-costing","status":"publish","type":"post","link":"https:\/\/marketingteacher.com\/staging\/5483\/standard-costing\/","title":{"rendered":"Standard Costing"},"content":{"rendered":"<h1>Standard Costing<\/h1>\n<ul class=\"lessonlinks\">\n<li class=\"lesson active\"><a href=\"https:\/\/marketingteacher.com\/staging\/5483standard-costing\/\">Lesson<\/a><\/li>\n<li class=\"exercise\"><a href=\"https:\/\/marketingteacher.com\/staging\/5483standard-costing-exercise\/\">Exercise<\/a><\/li>\n<li class=\"answer\"><a href=\"https:\/\/marketingteacher.com\/staging\/5483standard-costing-answer\/\">Answer<\/a><\/li>\n<\/ul>\n<p>Perhaps no accounting principle utilizes performance management concepts better than standard costing. One of the elements of cost accounting, standard costing is of particular benefit to those companies engaged in manufacturing.<\/p>\n<p>Each type of standard has its strengths and  weaknesses, but regular monitoring and making revisions based upon current  conditions incorporates performance management concepts and would seem to  present the best chance for success<\/p>\n<p>A firm wishing to utilize finances efficiently  monitors the following costs:<\/p>\n<ul>\n<li>Direct Material Costs<\/li>\n<li>Direct Labor Costs<\/li>\n<li>Manufacturing Overhead<\/li>\n<\/ul>\n<p>The process of standard costing is achieved,  in part, i.e., identifying a standard cost for each. A typical company may  employ a committee to develop a standard costing plan.<br \/>\n\t\t\t\t\t  Such a committee often involves key  personnel such as a Cost Accountant, Production Manager, Personnel Manager and  Purchase Manager. <\/p>\n<p>This group clarifies and classifying its  costs in more detail, grouping them by some categories such as the examples  below:<\/p>\n<ul>\n<li>Functionality (production, Selling,  Distribution, etc.)<\/li>\n<li>Fixed Costs<\/li>\n<li>Variable Costs<\/li>\n<li>Direct Costs<\/li>\n<li>Indirect Costs<\/li>\n<\/ul>\n<p>Assuming a company establishes realistic standard  costs, it may then monitor performance with an eye on increasing efficeintcy  and minimizing waste. <\/p>\n<p>To judge the company on its performance  over time, the standard costing team will determine which type of standard to  employ. Depending on its goals and industry environment, a company may choose  one of the following types of standards:<\/p>\n<p><strong>Maximum  Level Standards<\/strong> \u2013 presumes that maximum ideal  environmental conditions and company conditions are most favorable.<\/p>\n<p><strong>Current  Level Standards<\/strong> \u2013  developed from recent company conditions and industry environment. Current  standards are usually adjusted annually.<\/p>\n<p><strong>Basic  Level Standards<\/strong> \u2013 provides levels and baselines  designed for long term use, perhaps based on average levels over a 10 year  period. Basic standards don\u2019t adjust for current conditions, and does not serve  monitoring purposes as well.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Standard Costing Lesson Exercise Answer Perhaps no accounting principle utilizes performance management concepts better than standard costing. One of the elements of cost accounting, standard costing is of particular benefit to those companies engaged in manufacturing. Each type of standard has its strengths and weaknesses, but regular monitoring and making revisions based upon current conditions [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","footnotes":""},"categories":[28],"tags":[],"class_list":["post-4118","post","type-post","status-publish","format-standard","hentry","category-finance"],"_links":{"self":[{"href":"https:\/\/marketingteacher.com\/staging\/5483\/wp-json\/wp\/v2\/posts\/4118","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/marketingteacher.com\/staging\/5483\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/marketingteacher.com\/staging\/5483\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/marketingteacher.com\/staging\/5483\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/marketingteacher.com\/staging\/5483\/wp-json\/wp\/v2\/comments?post=4118"}],"version-history":[{"count":0,"href":"https:\/\/marketingteacher.com\/staging\/5483\/wp-json\/wp\/v2\/posts\/4118\/revisions"}],"wp:attachment":[{"href":"https:\/\/marketingteacher.com\/staging\/5483\/wp-json\/wp\/v2\/media?parent=4118"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/marketingteacher.com\/staging\/5483\/wp-json\/wp\/v2\/categories?post=4118"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/marketingteacher.com\/staging\/5483\/wp-json\/wp\/v2\/tags?post=4118"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}