Management Accounting chapter 13

Standard cost vaiance

Amount by which an actual cost differs from the standard cost (unfavourable if: actual cost > standard cost)

Variance cycle analysis

Analyse variances, identify questions, receive explanations, take corrective actions, conduct next period’s operations, prepare standard cost performance report

Perfection standards

Can only be obtained under perfect conditions

Practical or attainable standard

Tight as practical, but still expected to be attained

Price variance

Difference between the actual price and the standard price

Quantity variance

Difference between the actual quantity and the standard quantity

Responsibility reporting systems

Identify variances or exceptions to budget plans and relate those to the manager responsible

Standard material prices

Purchase price of the material + transportation costs incurred to obtain the material

Standard quantity of material

Amount required to be included in the finished product + allowance for normal waste expected in the production process

Kaizen costing

Process of cost reduction during the manufacturing phase of an existing product

Fixed overhead budget variance

Difference between actual and fixed overhead and budgeted fixed overhead