acct chapter 10

quantity decision

amount of input that should be used per unit of output

pricing decision

amount that should be paid per unit to be used

quantity decision produces

quantity standards

pricing decisions produces

price standards

standard cost per unit =

quantity standard x price standard

how are standards developed

historical experience, engineering studies, input from operating personnel

types of standards

ideal standards and currently attainable standards

standard costing system

standard dm, standard dl, standard overhead

normal costing system

actual dm, actual dl, budgeted overhead

actual costing system

actual dm, actual dl, actual overhead

standard cost sheet

provides production data needed to calculate standard unit cost

what should a manager compute through standard cost sheet

standard quantity of materials, standard hours allowed

standard quantity dm =

unit quantity standard x actual output

standard hours dh and oh =

unit labor standard x actual output

actual cost =

actual price x actual quantity

planned cost =

standard price x standard quantity

total budget variance =

actual cost - planned cost

price variance =

(actual price - standard price) x actual quantity

usage efficiency

(actual quantity - standard quantity) x standard price

unfavorable variances

actual price or actual usage is greater than standard

favorable variances

actual price or actual usage is less than standard

control limits

acceptable range that has a top and bottom

total materials variance =

actual cost - planned cost

material price variance =

(actual price - standard price) x actual quantity

materials usage variance =

(actual quantity - standard quantity) x standard price

materials price variance

(actual price x actual quantity) - (standard price x actuals quantity)

materials usage variance =

(actual quantity - standard quantity) x standard price

total labor variance =

(actual hourly wage rate x actual direct hours used) - (standard hourly wage rate x standard hours allowed)

total labor variance =

labor rate variance + labor efficiency variance

labor rate variance =

(actual hourly wage rate - standard hourly wage rate) x actual direct labor hours used

labor efficiency variance =

(actual direct labor hours used - standard direct labor hours used) x standard hourly wage rate

total variable overhead variance =

actual variable overhead - ( standard variable oh rate x standard hours)

variable overhead spending variance =

actual variable overhead - (actual overhead x standard variable oh rate)

variable overhead efficiency variance =

(actual hours - standard hours) x standard variable oh rate