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hello sir,
I found myself having a little doubt about standard cost plus and actual cost plus for pricing a product.
Is the standard cost plus actually what the customers pay?
The standard cost is the budgeted cost (the actual cost might end up being different).
With cost plus pricing, the price is usually calculated using the standard cost (because the price has to be fixed in advance, before the actual cost is known).However, for specific questions it depends on the exact wording of the question.
Thanks sir, but suppose it was about sales price variance specifically.
and the standard price were fixed, we assume that they changed the standard price during the year to cause a variance?In your original question you were asking about cost plus pricing – now you are asking about variances. There is no real connection as far as the exam is concerned!
If they changed the standard price during the year, then we will have planning and operational variances. For me to try and say more would be silly without seeing the actual wording of the question.
Have you watched my free lectures on basic variances and on planning and operational variances?
The lectures are a complete free course for Paper F5 and cover everything needed to pass the exam well.
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