Standard Costing

Standard costing is not a ‘method’ of costing (as marginal costing and absorption costing are different methods).
The standard cost is simply the budgeted cost, and is mentioned in several places in the notes. Particularly in the chapter of budgeting.
However the main relevance is in variance analysis where we compare the actual costs with the standard costs to be able to identify what is going wrong.

(I do hope that if you are using our Course Notes that you are working through them in chapter order, and that you are watching the lectures as you work through each chapter. You cannot learn just from the course notes – if you are not watching the lectures then you need to study from a Study Text. If you are watching the lectures with the notes in front of you, then you do not really need to read the Study Text.)

I know the sort of question that you are referring to – it is not actually further variance analysis, but the same ‘rules’. They are simply making it more difficult by having you use the ‘rules’ backwards.

The sort of question is where they tell you what the variance is, and then have you work out a ‘missing’ figure.

There are no extra formulae that I can give you (because there are no extra formulae 🙂 )

Obviously you must learn the rules for calculating each variance (and you write that you are OK with this).
If you do get a question where a variance is given, then write down the rule that you have learned for calculating that variance. Fill in all the figures that are given in the question (including the variance itself) and then calculate the missing figure.

It takes a bit of practice, but again there are no extra rules.

Also, don’t worry too much – if there are any questions like that it your exam then there will not be many. Most (if not all) of the variance questions will be asking you to calculate the variance in the normal way.