Standards
You'll learn how standard costing and variance analysis work in management accounting, and why they're essential for planning and controlling business performance.
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In this lesson
- 0:00 Standard costing and variance analysis overview
- 2:18 Understanding standard costs and their purpose
- 5:03 Types of standards: ideal, expected, current, basic
- 7:01 Advantages and disadvantages of standard costing
- 10:57 Building a standard cost card step by step
- 15:43 Using standard costs to create budgets
- 18:45 Marginal costing versus absorption costing approaches
About this lesson
This video breaks down the complete framework: what standard costs are, how to build a standard cost card, and how variances reveal the reasons behind financial performance. You'll discover the different approaches to setting standards (ideal, expected, and current), understand the advantages for budgeting and performance measurement, and see how a single standard cost card becomes the foundation for your entire budget. By the end, you'll be ready to calculate and interpret the variances that tell management exactly where the business performed better or worse than expected.
Duration: 22m
Transcript
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