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STANDARD COSTING
What is Standard Costing?
Standard costing is a cost accounting technique where predetermined costs (standards) are set for materials, labour, and overheads, and actual costs are compared against these standards to identify variances.
What is a 'standard' in standard costing?
A pre-determined measurable quantity set in defined conditions.
What is a 'standard cost' in the context of cost accounting?
A standard cost is a pre-determined or budgeted cost calculated under specified working conditions, used as a benchmark against which actual costs are measured.
What is the formula for Material Price Variance (MPV)?
MPV = (Standard Price – Actual Price) × Actual Quantity.
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