Standard cost accounting
The normal cost calculation attempts the drawbacks of the actual cost to reduce the past orientation and the consideration of random fluctuations of the values. This is done by calculating the average actual costs of several past periods. This also includes normal costs. The normal cost calculation is operated as a full cost calculation in the form of a
- Rigid normal cost accounting
- Flexible standard cost accounting
The rigid standard cost calculation only applies to a fixed level of employment and only works with price and quantity variances. The quantity variance arises from differences between the quantities actually consumed within a cost center and the average quantities.
The flexible standard cost accounting includes changes in the level of employment and differentiates the quantity discrepancy into consumption and employment discrepancies by adapting the standard cost rates to the changed capacity utilization.