Difference between revisions of "CAS 407 - Use of Standard Costs for Direct Material and Direct Labor"

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(Created page with " == Purpose == * To improve cost measurement and cost assignment for contractors that choose to use a "standard" type accounting system. == Requirements == * Standard costs ...")
 
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== Purpose ==
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== 9904.407-20 Purpose ==
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* To improve cost measurement and cost assignment for contractors that choose to use a "standard" type accounting system.
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== Requirements ==
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'''(a)''' The purpose of this Cost Accounting Standard is to provide criteria under which standard costs may be used for estimating, accumulating, and reporting costs of direct material and direct labor; and to provide criteria relating to the establishment of standards, accumulation of standard costs, and accumulation and disposition of variances from standard costs. Consistent application of these criteria where standard costs are in use will improve cost measurement and cost assignment.
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* Standard costs may be used for estimating, accumulating, and reporting costs of direct material and direct labor when:
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* Standard costs are entered into the books of the account;
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* Standard costs and related variances are appropriately accounted for at the level of the production unit; and
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'''(b)''' This Cost Accounting Standard is not intended to cover the use of pre-established measures solely for estimating.
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* Practices regarding the setting and revising of standards, use of standard costs, and disposition of variances are stated in writing and are consistently followed.  
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==9904.407-30 Definitions==
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(a) The following are definitions of terms which are prominent in this Standard. Other terms defined elsewhere in this chapter 99 shall have the meanings ascribed to them in those definitions unless paragraph (b) of this subsection requires otherwise.
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(1) '''''Labor cost at standard''''' means a pre-established measure of the labor element of cost, computed by multiplying labor-rate standard by labor-time standard.
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(2) '''''Labor-rate standard''''' means a pre-established measure, expressed in monetary terms, of the price of labor.
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(3) '''''Labor-time standard''''' means a pre-established measure, expressed in temporal terms, of the quantity of labor.
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(4) '''''Material cost at standard means''''' a pre-established measure of the material element of cost, computed by multiplying material-price standard by material-quantity standard.
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(5) '''''Material-price standard''''' means a pre-established measure, expressed in monetary terms, of the price of material.
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(6) '''''Material-quantity standard''''' means a pre-established measure, expressed in physical terms, of the quantity of material.
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(7) '''''Production unit''''' means a grouping of activities which either uses homogeneous inputs of direct material and direct labor or yields homogeneous outputs such that the costs or statistics related to these homogeneous inputs or outputs are appropriate as bases for allocating variances.
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(8) '''''Standard cost''''' means any cost computed with the use of pre-established measures.
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(9) '''Variance''''' means the difference between a pre-established measure and an actual measure.
  
  

Revision as of 13:30, 29 September 2014

9904.407-20 Purpose

(a) The purpose of this Cost Accounting Standard is to provide criteria under which standard costs may be used for estimating, accumulating, and reporting costs of direct material and direct labor; and to provide criteria relating to the establishment of standards, accumulation of standard costs, and accumulation and disposition of variances from standard costs. Consistent application of these criteria where standard costs are in use will improve cost measurement and cost assignment.


(b) This Cost Accounting Standard is not intended to cover the use of pre-established measures solely for estimating.

9904.407-30 Definitions

(a) The following are definitions of terms which are prominent in this Standard. Other terms defined elsewhere in this chapter 99 shall have the meanings ascribed to them in those definitions unless paragraph (b) of this subsection requires otherwise.

(1) Labor cost at standard means a pre-established measure of the labor element of cost, computed by multiplying labor-rate standard by labor-time standard.

(2) Labor-rate standard means a pre-established measure, expressed in monetary terms, of the price of labor.

(3) Labor-time standard means a pre-established measure, expressed in temporal terms, of the quantity of labor.

(4) Material cost at standard means a pre-established measure of the material element of cost, computed by multiplying material-price standard by material-quantity standard.

(5) Material-price standard means a pre-established measure, expressed in monetary terms, of the price of material.

(6) Material-quantity standard means a pre-established measure, expressed in physical terms, of the quantity of material.

(7) Production unit means a grouping of activities which either uses homogeneous inputs of direct material and direct labor or yields homogeneous outputs such that the costs or statistics related to these homogeneous inputs or outputs are appropriate as bases for allocating variances.

(8) Standard cost means any cost computed with the use of pre-established measures.

(9) Variance means the difference between a pre-established measure and an actual measure.


Applicability

  • Applies under full coverage only. 48 CFR 9904.407
  • Does not cover the use of pre-established measures solely for estimating.
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