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In setting standard cost for materials, which element must be determined first and why? _
Quality must be determined first, because it affects all the other variables (Quantity and Price).
The elements that should be taken into consideration while arriving at standard rate for a product are the quality, availability, probability of rate fluctuations along with the rmaximum range of the fluctuation and the order quantity. Out of these, quality definitely plays the major role. Considering the rate of the highest quality and then plotting all other elements linked to this quality will be the most effective standard rate.
the most important is quality.
I Think the main focus should be on Quality, because its effects more on cost and other variables, and for future durable into the market
Carrying/transportation Cost. Because this element affects the cost of materials from the beginning. this cost affects CM most than the element.
The raw materials. This is because the cost will affect all the other eliments like the cost put towards the human resource, the transportation the factory or warehouse the taxes and miscllanious elements.
Cost of the Material , as Quality is taken as granted & if cost is within target then Delivery can be improved & managed,
The cost of raw material, as it is, in general, the most substantial from the cost point of view, as it usually comprises no less than60% of the cost of production.
Market trend, price comparison, competitors price, service, benefits and freebees from the organisations in same busines and in the vicinity.