variances

how do you solve for DM static budget variance?

Actual DM cost - DM static budget

(AO x AI x AP) - (EO x SI x SP)

how do you solve for the DM flexible budget variance?

Actual DM cost - DM flexible budget

(AO x AI x AP) - (AO x SI x SP)

how do you solve for the DM volume variance?

DM flexible budget - DM static budget

(AO x SI x SP) - (EO x SI x SP)

how do you calculate the DM price budget variance

(AO x AI x AP) - (AO x AI x SP)

(keep everything the same, the variable that should be changing is price)

how do you find the DM efficiency variance

(AO x AI x SP) - (AO x SI x SP)

in what cases would “favorable” variances be bad or “unfavorable” variances would actually be good?

if company is using worse quality of materials or lost an important employee. don’t need to memorize this examples, just remember that favorable does not equal “good”

how do you calculate the DM mix variance?

sum: (AO x AI x A% x SP) - sum: (AO x AI x S% x SP)

what is the DM yield variance

sum: (AO x AI x S% x SP) - (AO x SI x S% x SP)

what is standard quantity allowed

(SQA) = AO x SI

how do you calculate Fixed overhead status budget variance

(AQ x AP) - (EQ x SP)

also (AO x AI x AP) - (EO x SI x SP)

how do you calculate FOH volume variance

FOH Applied - FOH flexible budget

(SQA x SP) - (EQ - SP)

what is the equation to find AI and SI for DL if there are MULTIPLE ELEMENTS

AI: (total direct labor hours for #1/total direct labor hours for #2) / output

if there is no mix, then yield variance and efficiency variance are equal

read again

for fixed overhead, the costs do not change, therefore, having a higher output is ______(favorable/unfavorable)?

favorable. because it means we are getting the most bang for our buck. if it is is less, it means some resources are being idly used

what is the journal entry for an unfavorable DM price variance?

debit to raw materials (for the amount of the standard price of the actual amount of materials purchased)

debit to materials price variance (the variance amount)

credit to accounts payable for the actual cost of the purchase

typically, are favorable variances represented by debits or credits?

credits

typically, are unfavorable variances represented by debits or credits?

debits

does the DM efficiency variance care about marietta’s purchased or materials used?

materials used

for price variance do you use materials purchased or materials used for AI?

price: use materials purchased

for efficiency variance do you use materials purchased or materials used for AI?

in revenue variances, what does AS mean?

actual total sales