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Essay / Research Paper Abstract
This 3 page paper examines the use of standard cost accounting and assesses the ways in which it can benefit a manufacturing company. The bibliography cites 1 source.
Page Count:
3 pages (~225 words per page)
File: TS14_TEstancost.rtf
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Unformatted sample text from the term paper:
in order to allocate and assess costs. One of the older systems of cost accounting s standard cost accounting, often over looked today for the more fashionable technologically driven alternatives.
However, when looking at standard cost accounting there are a number ways that this will benefit a manufacturing firm. The basis of this is to take the concept of historical
costing further. There are different types of costs, fixed costs, which are in place no matter what level of production takes place, there are also the variable costs which vary
in relationship to the goods that are produced, such as the raw materials. The standard cost accenting takes the fixed cost for the upcoming period, for example, the next
year, month or even week, the full fixed costs are allocated to the production and the system will then record the total costs of production for that period. The
system is simple, in the simplest form the fixed costs are split between the goods produced. For example, if there was a widget manufacturer and they manufactured 1,000 widgets a
week, and the fixed costs were 1,000 a week, then the cost of manufacturing the widget would be the 1 per widget (this is 1,000 widgets divided by the 1,000
fixed costs), plus the variable costs. If the variable costs were 2 per widget, the total cost would be 3 per widget (1 fixed cost + 2 variable cost =
3). This means that the company can allocate all of the costs that are incurred even if the goods are not sold in the period that they are produced. Variants
of the standard cost accounting may also locate the costs on a different basis, such as a per labour hour or production hour basis. This may be seen as
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