STANDARD COSTING
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Accounting and Financial Management for Bankers — JAIIB.
One-liners from this chapter
Free sample — 8 of 65 rapid-fire Q&A cards.
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.
What is the primary purpose of variance analysis in standard costing?
Variance analysis identifies the difference between standard costs and actual costs, enabling management to investigate causes of inefficiencies and take corrective action.
What is the formula for Material Usage Variance (MUV)?
MUV = (Standard Quantity – Actual Quantity) × Standard Price.
How is a 'favourable variance' defined in standard costing?
A favourable variance arises when actual cost is less than the standard cost, or when actual revenue exceeds standard revenue, indicating better-than-expected performance.
What is the formula for Labour Cost Variance (LCV)?
LCV = Standard Labour Cost – Actual Labour Cost.
Video classes for this chapter
More chapters in Module D - Taxation and Fundamentals of Costing
Master the full AFM syllabus
Every chapter of Accounting and Financial Management for Bankers — videos, tests, notes and one-liner decks in one place.