Managerial Accounting for Managers: Quantity and Price Standards

Managerial Accounting for Managers
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Managerial Accounting for Managers
What is a quantity standard and a price standard?
The quantity standard of material allowed for the actual production of a single unit, and it indicates the quantity of input that should be used in producing the actual output. The quantity standard is determined as the standard quantity per unit multiplied for actual output, and the quantity standard is based on actual production and not budgeted production. There are differences in the price per unit of the raw materials, and the higher the cost of raw materials and work-in-progress, the higher the cost of inventory. The price standard reflects the expected cost of obtaining each input used when producing a product (Davis & Davis, 2019). The price standard is used in direct materials, direct labor, and manufacturing overhead, just like the quantity standard. Standards are used...