ACC 202 CHAPTER 9
standard hours per unit of an output includes two things
an allowance for cleanup and downtime, the estimated time to complete the unit
the materials price variance is the difference between the actual price of materials
and the standard price for materials with the difference multiplied by the actual quantity of materials
variance cycle analysis is
begins with the preparation of the budget
standards are three things
benchmarks for measuring performance, set for each major production input or task, compared to the actual quantities and costs of inputs
volume variance is the difference between
budgeted and applied fixed overhead
the calculation of the budget variance uses
budgeted fixed overhead, actual fixed overhead
quantity variance is
calculated using the standard price of the input
the standard price per unit for direct materials
can change based on the delivery method
budget variance is the
difference between actual fixed overhead and the budgeted fixed overhead
the following two are used to calculate the standard quantity per unit of direct materials
direct materials requirements per unit of finished product, allowance for waste and spoilage
unfavorable labor efficiency can result from three things
faculty equipment, insufficient product demand, poorly motivated workers
if overhead is over applied, the total of the standard cost overhead variance Is
favorable
when the actual hourly rate is lower than the standard hourly rate, the labor rate variance is
favorable
a budget that takes into account how costs are affected by changes in level of activity is
flexible budget
materials price variance is 3 things
generally the responsibility of the purchasing manager, charged to the production manager when the production problems occur, impacted by the delivery method chosen
favorable variances x retained earnings and unfavorable variances x retained earnings
increase, decrease
excessive inventory on hand may lead to three things
inefficient operations, obsolete goods, high defect rates
materials price variance is generally calculated at the time materials are purchased because
it allows materials to be carried in inventory accounts at a standard cost, it simplifies bookkeeping, management can generate more timely variance reports
SR(AH-SH) is the formula for
labor efficiency
poor supervision is one possible cause of an unfavorable
labor efficiency variance
AH(AR-SR) is the formula for
labor rate variance
SP(AQ-SQ) is the formula for
materials quantity variance
variances are more accurate when using
multiple cost drivers
unfavorable labor rate variances may occur as a result of two problems
overtime premiums being charges to the direct labor account, skilled workers being assigned to jobs requiring little skill
most companies compute the materials price variance when materials are x and the material quantity variance when the materials are x
purchased, used
net operating income from the income statement is recorded in the x on the balance sheet
retained earnings
accounts impacted by closing standard cost variance clearing accounts are
retained earnings, cogs
calculation of standard price per unit of direct materials includes
shipping costs, purchase price of the materials, purchase discounts
unfavorable labor rate variances may occur as a result of
skilled workers being assigned to jobs that require little skill, overtime premium being charged to the direct labor account
a benchmark used in measuring performance is called a
standard
when calculating labor rate variance, multiply the actual hours worked times the x labor rate and compare it to the actual hours worked times the x labor rate
standard, actual
planning budgets are sometimes called
static budgets
an unchanged planning budget is known as a
static planning budget
quantity variance
the difference between the amount of an input used and the amount that should have been used, all evaluated at the standard price for the input
true statements
treating fixed costs as variable are necessary for product costing, fixed costs are applied to work in process like they are variable costs
if the actual cost is greater than what the cost should have been, the variance is labeled as
unfavorable
when budgeted fixed overhead costs exceeds fixed overhead applied to work in process, the volume variance is labeled
unfavorable
flexible budgets may be prepared using more than one cost driver to improve
accuracy
materials price variance is calculated using the x quantity of the input purchased
actual
price variance is the difference between
actual price and the standard price multiplied by the actual amount of the input
materials price variance uses
actual price of the input, actual quantity of the input purchased, standard price of the input
materials price variance is calculated using the
actual quantity of the input purchased
the budget variance is the difference between the x fixed overhead and the x fixed overhead
actual, budgeted
when preparing a flexible budget, the level of activity
affects the variable costs only
which of the following are used to calculate the standard quantity per unit of direct materials
allowance for waste and spoilage, direct materials requirements per unit of finished product
a flexible budget shows three things
what revenue should have been at the actual level of activity, what variable costs should have been the actual level of activity, what fixed costs should have been at the actual level of activity
