Accounting Final

irrelevant costs

-sunk costs -future costs

revenue variance

the difference between the actual total revenue and budgeted total revenue at the actual level of activity

rush orders arising from poor scheduling

the production department should generally be responsible for materials price variances that resulted from:

break even point is the level of sales at which __

total revenue equals total costs

unit contribution margin

Once the break-even point has been reached, net operating income will increase by the amount of the _____ for each additional unit sold.

self-imposed/participative budget

a budget that is prepared with the full cooperation and participation of managers at all levels

budget

a detailed quantitative plan for acquiring and using financial and other resources over specific period

standard rate exceeds the actual rate

a favorable labor rate variance indicates that

actual price

amount actually paid for input used

standard price

amount that should have been paid for input used

performance report

combines activity variances and revenue and spending variances

quantity variance

difference between how much of an input was actually used and how much should have been used for the actual level of output, multiplied by the standard price/rate of the input

price variance

difference between the actual price and the standard price, multiplied by the actual amount of the input purchased

activity variance

due to the difference in actual level of activity and the level of activity included in planning budget

differential analysis

focusing on future costs and benefits that differ between alternatives

two types of standards

price and quantity

standard quantity

quantity allowed for the actual output of the period

flexible budget

show what costs should be for the actual level of activity

quantity standards

specify how much of an input should be used to make a product or provide a service

price standards

specify how much should be paid for each unit of the input

actual quantity

the amount of direct materials, direct labor, and variable manufacturing overhead actually used