Define quantity standards and price standards as used in the standard cost method You are the executive...

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Accounting

Define quantity standards and price standards as used in thestandard cost method
You are the executive responsible for overseeing the BurberryWomen’s Sportswear and Accessories Department. Several events havetranspired with the suppliers of raw materials that may adverselyimpact the supply chain. There has been severe weather in Peru,which is where some of the raw material comes from to manufactureapparel products. Fuel prices have risen in several countries whereyou obtain material for the synthetic fabrics. Several of theranches where you purchase material for your leather goods havereduced the size of their herds.
1 Prepare a /recommendations/report on the impact of theseevents on the cost of raw materials as well as the operational andfinancial implications for the Woman’s Sportswear and AccessoryDepartment.
2 You must also propose the best course of action in light ofthese events.
This might include maintaining existing sales prices andconsequently operate with lower margins; pass the cost increasesalong to customers in the form of higher prices; lower the rawmaterial costs; or consider alternative products. In order toformulate your response, you will want to carefully consider theproblem, examine the pros and cons of each alternative underconsideration, and document your recommendations using soundarguments that are well supported.

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First Question Standard costing practices creation of a standardbudget cost at the beginning of the period and the comparing the variances of actual costs from budgeted costs In simple words standard costing involves evaluating the variance in what we expected the cost to be and what it actually turned out to be The total cost whether standard or actual is made up of two components quantity of material hours in case of labor and the price of the material On the similar note the variance can also be bifurcated into two parts quantity variance and price variance Thats why in order to calculate each of the variances separately standards are set in qty terms See Answer

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Define quantity standards and price standards as used in thestandard cost methodYou are the executive responsible for overseeing the BurberryWomen’s Sportswear and Accessories Department. Several events havetranspired with the suppliers of raw materials that may adverselyimpact the supply chain. There has been severe weather in Peru,which is where some of the raw material comes from to manufactureapparel products. Fuel prices have risen in several countries whereyou obtain material for the synthetic fabrics. Several of theranches where you purchase material for your leather goods havereduced the size of their herds.1 Prepare a /recommendations/report on the impact of theseevents on the cost of raw materials as well as the operational andfinancial implications for the Woman’s Sportswear and AccessoryDepartment.2 You must also propose the best course of action in light ofthese events.This might include maintaining existing sales prices andconsequently operate with lower margins; pass the cost increasesalong to customers in the form of higher prices; lower the rawmaterial costs; or consider alternative products. In order toformulate your response, you will want to carefully consider theproblem, examine the pros and cons of each alternative underconsideration, and document your recommendations using soundarguments that are well supported.