chapter  11
More on Simplified Time-Based Accounting
WithJoyce I. Warnacut
Pages 14

Getting rid of standard cost is not the solution in and of itself. Even actual cost systems still allocate overhead to parts to come up with product cost. Why? Because there is no such thing as actual overhead per part! Therefore, in order to produce fully absorbed product costs, whether on a standard or actual basis, the overhead must be allocated. What are the two most important objectives for time-based accounting?

Eliminate the allocation of overhead. Whether standard or actual, overhead by part is a fictitious number.

Get rid of detailed variance reporting in the financial statements that mask the true cost of material, labor, and overheads while confusing the reader.