8 1 Explain How and Why a Standard Cost Is Developed Principles of Accounting, Volume 2: Managerial Accounting

Once a difference between expected and actual costs is identified, variance analysis should delve into why the costs differ and what the magnitude of the difference means. Accounting professionals and management work together to create cost standards. All future actual costs are expected to be close to the estimates calculated for standard costs. As a[…]

Standard costing definition

The currently attainable standard is the most popular standard, and standards of this kind are acceptable to employees because they provide a definite goal and challenge to them. A currently attainable standard is one that represents the best attainable performance. It can be achieved with reasonable effort (i.e., if the company operates with a “high”[…]