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The SMCR Model Is Also Known as the Transmission Model

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The SMCR model is also known as the transmission model.

Understand the separation of standard costs into two components for detailed variance analysis.
Recognize the need for updating standard costs in response to changes in production specifications, labor contracts, and material costs.
Understand the concept and calculation of direct labor variances, including rate and time variances.
Identify and calculate direct materials variances, including price and quantity variances.

Definitions:

Standard Deviation

The statistical measure that quantifies the dispersion or variability within a data set.

Mean

The arithmetic average of a set of numbers, calculated by adding them together and dividing by the count of the numbers.

Z-score

A numerical metric indicating how a specific value compares to the average of a dataset, expressed by the number of standard deviations away from that average.

Standard Deviation

An indicator of the spread or variability within a data set; where a small standard deviation indicates values closely clustered around the average, and a large standard deviation suggests they are widely scattered.

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