Chapter 10
standard price per unit
defines the price that should be paid for each unit of direct materials and should reflect the final, delivered cost of those materials
standard rate per unit
equals the variable portion of the predetermined overhead rate
true/false: a negative price variance is unfavorable
false
true/false: it is assumed that labor is a fixed cost
false
the formulas for direct labor variance and variable overhead variances are the same, except for what
instead of using SR, standard rate per labor hour, use VP, variable portion of predetermined overhead rate
SH for labor variances is used in what and stands for what
labor efficiency variance standard quantity of labor hours allowed for the actual output
direct labor quantity and price standards are usually expressed in terms of
labor hours or a labor rate
AH for labor variances is used in what and stands for what
labor rate and efficiency variances actual quantity of labor hours used in production
SR for labor variances is used in what and stands for what
labor rate and efficiency variances standard rate per direct labor hour
AR for labor variances is used in what and stands for what
labor rate variance actual rate per direct labor hour
direct labor spending variance equation in words
labor rate variance - labor efficiency variance
AQ is used in what and stands for what
materials price and quantity variances actual quantity of inputs purchased and used in production
SP is used in what and stands for what
materials price and quantity variances standard price per unit of the input
AP is used in what and stands for what
materials price variance actual price per unit of the input
direct materials spending variance equation in words
materials price variance - materials quantity variance
SQ is used in what and stands for what
materials quantity variance standard quantity of inputs allowed for the actual output
standard hours per unit (for variable overhead)
measures the amount of the allocation base from a company's predetermined overhead rate that is required to produce one unit of finished goods
how is the standard hours allowed calculated
multiply the actual output by the standard hours per unit
how is the standard quantity allowed calculated
multiply the actual output by the standard quantity per unit
how do you find the standard direct labor cost per unit
multiply the standard hours per unit by the standard rate per hour
how do you find the standard variable manufacturing overhead cost per unit
multiply the standard hours per unit by the standard rate per unit
how do you find the standard direct materials cost per unit
multiply the standard quantity per unit by the standard price per unit
who is responsible for deviance from quantity standards
production manager
who is responsible for the materials quantity variance
production manager
who is responsible for deviance from price standards
purchasing manager
who is responsible for the materials price variance
purchasing manager
when the quantity of materials purchased differs from the quantity of materials used, which is used for materials price variance
quantity of materials purchased
when the quantity of materials purchased differs from the quantity of materials used, which is used for materials quantity variance
quantity of materials used
what variances indicate how well costs were controlled given the actual level of activity
revenue and spending variances
standard cost card
shows the standard quantity/hours and standard price/rate of the direct materials, direct labor, and variable manufacturing overhead require to produce a unit of product
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
standard hours allowed
the amount of input that should have been used to manufacture the actual output of finished goods produced (when computing direct labor and variable overhead variances)
standard quantity allowed
the amount of input that should have been used to manufacture the actual output of finished goods produced (when computing direct materials variances)
the impact on profit of a change in the level of activity is captured in
the overall net operating income activity variance
true/false: a positive quantity variance is unfavorable
true
true/false: standard cost variance reports are usually prepared on a monthly basis and can become outdated
true
true/false: standard costs can greatly simplify bookkeeping
true
true/false: when the direct labor efficiency variance is favorable, the variable overhead efficiency variance will always be favorable
true
what happens when the quantity of materials purchased differs from the quantity of materials used
use the quantity of materials purchased for the materials price variance and use the quantity of materials used for the materials quantity variance
the _____ portion of manufacturing overhead can be analyzed using the same basic formulas that we used for direct materials and direct labor
variable
SH for variable overhead variances is used in what and stands for what
variable overhead efficiency variance standard quantity of labor hours allowed for the actual output
VP for variable overhead variances is used in what and stands for what
variable overhead rate and efficiency variances variable portion of the predetermined overhead rate
AR for variable overhead variances is used in what and stands for what
variable overhead rate variance actual rate per labor hour
variable overhead spending variance equation in words
variable overhead rate variance - variable overhead efficiency variance
when will the standard hours per unit for variable overhead and the standard hours per unit for labor be equal
when they use the same allocation base (direct labor hours)
does the standard price per unit reflect the delivered cost of materials
yes
does the standard quantity per unit allow for scrap and spoilage
yes
does the standard rate per hour include employment taxes and fringe benefits
yes
in price, quantity, and spending variances, what means it's favorable
a negative number
in price, quantity, and spending variances, what means it's unfavorable
a positive number
how do you find the total standard cost per unit
add up the standard costs for direct materials, direct labor, and variable manufacturing overhead
standard cost variance analysis
decomposes spending variances from the flexible budget into a price variance and a quantity variance
standard hours per unit (for labor)
defines the amount of direct labor hours that should be used to produce one unit of finished goods
standard quantity per unit
defines the amount of direct materials that should be used for each unit of finished product, including an allowance for scrap and spoilage
standard rate per hour
defines the company's expected direct labor wage rate per hour, including employment taxes and fringe benefits