![]() Date: 2024-08-17 Page is: DBtxt003.php bk009050600 | |||||||||
TrueValueMetrics
ACTION INFORMATION FOR ALL OF SOCIETY Metrics about the State, Progress and Performance of the Economy and Society Metrics about Impact on People, Place, Planet and Profit Chapter 5 - ACCOUNTING'S KEY CONCEPTS 5-6 QUANTIFYING VALUE | |||||||||
Standards The techniques of standard costing can be used in TVM Value Accountancy as they are in corporate accountancy. A standard is what might be expected ... compared to an actual which is what actually happened. There are many ways in which the comparison between actual and standard can be made ... the aim of analytical accountancy is for this comparison to improve understanding the most and cost the least. Useless ... or valuable Standards my be thought of as being fixed and arbitrary and useless ... or they may be used as a very powerful tool for understanding a lot of complex material in an efficient way. In this latter mode standards come alive. They start off being the best that can be ... best in the sense of reflecting the best data that are accessible ... and then they improve as better data becomes available and is made accessible. Standard cost Standard cost accounting helps cost accountants measure cost performance without getting deeply buried in detail. Standard costs are the theoretical cost of an item or service Standard, actual, variance The comparison of standard with actual alerts a cost accountant to something that is different and helps put the focus of effort onto something that is out of the ordinary. If actual costs are different from standard costs, then it is time to find out why. Standard values The same approach is used for value as for cost. Every activity produces something ... what is the standard value of this output? This can be determined in an arbitrary manner, and then it can be used in an analytical framework, and compared to alternative values that are justified from different other perspectives.
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