Concept explainers
a.
Introduction: The budgeted amount for direct material to be used is based on
To calculate: The budgeted amount for direct material used, direct labor cost, and applied
b
Introduction: The standard cost per unit is the pre-established cost per unit. The standard costs indicate the planned cost of producing a unit of output. The standard cost of producing a unit includes the cost of material, cost of labor, and overheads.
To calculate: The Standard cost per unit.
c
Introduction: The companies incur a lot of costs in their day to operations and therefore need to control the cost. The costs can be controlled only if there are predetermined costs or budgets. The standard cost and budget can help in comparing actual costs with budgeted ones.
The advantages of standard cost to an entity.
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