Standard Costing Principles Management Accounting
How to best apply and learn the Standard costing formula and section
Original post by Melishka2205
How to best apply and learn the Standard costing formula and section
Where you say standard costing formula, should I presume you means something similar to the following?: https://www.wallstreetmojo.com/standard-cost-formula/
Standard Cost = Direct Material Cost + Direct Labor Cost + Variable Overhead + Fixed Overhead
[start]Direct material cost = Number of units x Price of each unit[/start]
[start]Direct labor cost = Total units x hours worked x rate for each labor[/start]
[start]Variable overhead = Variable manufacturing cost x total units[/start]
[start]Fixed overhead = Fixed cost of production[/start]
How to best apply and learn the material? Usually through the questions they give you (I presume in uni?). You would get better through practice.
Having said, that I would personally do a spider diagram and then branch out the individual components. If you focus too much on the individual constituent, you can loose sight of the whole. Instead, I would cluster each part so I wouldn't have to pay too much attention on each part.
The general idea of formula is to find out the total cost of production, and each part is to find out the total cost for each part. Once you understand this principle, a lot of the individual components fall into place (I hope) i.e. it would become borderline common sense at this point.
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