CAS 407 - Use of Standard Costs for Direct Material and Direct Labor
From Knowledge base
Purpose
- To improve cost measurement and cost assignment for contractors that choose to use a "standard" type accounting system.
Requirements
- Standard costs may be used for estimating, accumulating, and reporting costs of direct material and direct labor when:
- Standard costs are entered into the books of the account;
- Standard costs and related variances are appropriately accounted for at the level of the production unit; and
- Practices regarding the setting and revising of standards, use of standard costs, and disposition of variances are stated in writing and are consistently followed.
Applicability
- Applies under full coverage only. 48 CFR 9904.407
- Does not cover the use of pre-established measures solely for estimating.
