Chapter_10_Presentation_Study_Aid_Slides

Standards

Benchmarks or norms for measuring performance in managerial accounting.

Quantity Standards

Specifications on how much of an input should be used to make a product or provide a service.

Price Standards

Specifications on how much should be paid for each unit of input.

Standard Cost Card

A card that summarizes standard costs for one unit of a product, showing standard prices and quantities.

Variance Analysis

The process of evaluating differences between actual outcomes and standard expectations.

Spending Variance

The difference between actual spending and what was budgeted.

Price Variance

The difference between actual price and standard price.

Quantity Variance

The difference between actual quantity and standard quantity.

Materials Quantity Variance

The variance that measures the difference between the actual quantity of materials used and the standard quantity expected for actual production.

Labor Rate Variance

The difference between the actual hourly rate paid to workers and the standard rate that was expected.

Labor Efficiency Variance

The variance that measures the difference between actual hours worked and standard hours allowed for actual production.

Variable Manufacturing Overhead Rate Variance

The difference between the actual variable manufacturing overhead cost incurred and the budgeted variable overhead.

Flexibility in Budgets

Using standard costs to compute activity and spending variances for better financial analysis.

Controllability of Variances

The principle that variances may not be entirely controllable by one person or department, affecting accountability.

Management by Exception

A management strategy that focuses on significant deviations from expected performance to improve efficiency.

Standard Price

The amount that should have been paid for the input used.

Actual Price

The amount actually paid for the input used.

Standard Quantity

The standard quantity allowed for the actual output of the period.

Direct Materials Variance

A measure of the difference between the actual cost of materials and the expected cost based on standards.

Direct Labor Variance

A measure of the difference between the actual cost of labor and what was expected based on standards.

Variance Analysis Model

A structured approach for assessing variances, typically using factors like actual price, standard price, actual quantity, and standard quantity.