Managerial Accounting. Chapter 10: Standard Costs and Variances

Standard Cost Card

A detailed lsiting of the standard amounts of imputs and their costs that are required to produce one unit of a specific product.

Price Variance

A variance that is computed by taking the difference between the actual price and the standard price and multiplying the result by the actual quantity of the input.

Quantity Variance

A variance that is computed by taking the difference between the actual quantity of the input used and the amount of the input that should have been used for the actual level of output and multiplying the result by the standard price of the input.

Standard Quantitiy per Unit

The amount of an input that should be required to compelte a single unit of product, including allowances for normal waste, spoilage, rejects, and other normal ineffieciences

Standard Quantity Allowed

The amount of an input that should have been used to complete the periods actual output. It is computed by multiplying the actual number of units produced by the standard quantity per unit.

Standard Hours per Unit

The amount of direct labor time that should be required to complete a single unit of product. including allowances for breaks, machine downtime, cleanup, rejects, and other normal inefficiencies.

Variable Overhead Efficiency Variance

The differecne between the actual level of acivtty (direct labor-hours, machine-hours, or some other base) and the standard activity allowed, multiplied by the variable part of the predetermined overhead rate.

Variable Overhead Rate Variance

The differenc tbetween the actual variable overghead cost incurred during a period and the standadd cost that should have been incurred based on the actial activity in the period.

Labor Rate Variance

The difference between the actual hourly labor rate and the standard rate, multiplied by the number of hours worked during the period.

Labor Efficiency Variance

The difference between the actual hours taken to complete a task and the standard hours allowed for the actual output, multiplied by the standard hourly rate.

Materials Quantity Variance

The difference between the actual quantity of materials used in the production and the standard quantity allowed for the actual output, multiplied by the standard price per unit of materials.

Materials Price Variance

The difference between the actual unit price paid for an item and the standard price, multiplied by the quantity purchased.

Standard Rate per Hour

The labor rate that should be incurred per hour of labor time, including employment taxes and fringe benefits.

Standard Cost per Unit

The standard quantity allowed of an input per unit of a specific product, multiplied by the standard price of the input.

Standard Hours Allowed

The time that should have been taken to complete the periods output. It is computed by multiplying the actual number of units produced by the standard hours per unit.

Standard Price per Unit

The price that should be paid for an input