Discuss Standard Costing

question 7

Essay

Discuss standard costing.As part of your discussion,define a standard cost.In addition,compare and contrast standard costs and predetermined overhead costs.Include in your discussion at least three reasons why standard costs are introduced into a cost accounting system.How is a standard cost accounting system useful to management?

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Definitions:

Employee Payroll

The total amount due to employees for the work they’ve done, including wages, salaries, and bonuses.

Interest Expense

The cost incurred by an entity for borrowed funds, reflecting the interest payments on debt.

Note Payable

A written promise to pay a specific amount of money, usually with interest, by a certain date, representing a form of debt.

Times Interest Earned

A ratio assessing a firm's capability to fulfill its debt responsibilities through the comparison of its earnings before interest and taxes against its interest expenditures.