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Flashcards in Business 2: Variance Analysis Deck (22)
1

Performing a budget variance analysis involves doing what?

Comparing actual results to the annual business plan to determine favorable and unfavorable variances

2

In a standard costing system, what costs are used for all manufacturing costs (i.e. raw materials, DL, and manufacturing O/H)?

Standard costs

3

For DM and DL, what two variances are typically calculated?

1) Price (rate) variance
2) Quantity (efficiency) variance

4

In analyzing MOH, what does a net debit balance mean?

- MOH underapplied
- Unfavorable variance

5

In analyzing MOH, what does a net credit balance mean?

- MOH overapplied
- Favorable variance

6

Variable MOH variance can be further broken down into what two types of variances?

1) Rate (spending) variance
2) Efficiency (usage) variance

7

Fixed MOH variance can be divided into what two types of variances?

1) Budget (spending) variance
2) Volume variance

8

In a standard costing system, how do you calculate direct cost?

Std. direct cost = Std. price * Std. quantity

9

In a standard costing system, how do you calculate indirect (OH) costs?

Std. indirect costs = Std. (predetermined) application rate * Std. quantity

10

What are the three purposes of a standard costing system?

1) Cost control
2) Data for performance evaluations (variance analysis)
3) Ability to learn from standards and improve various processes

11

How do you calculate DM price variance?

= Actual quantity purchased
* (actual price - std. price)

12

How do you calculate DM quantity usage variance?

= Std. price
* (actual Q used - std. Q allowed)

13

How do you calculate DL rate variance?

= Actual hours worked
* (actual rate - std. rate)

14

How do you calculate DL efficiency variance?

= Std. rate *
(actual hours worked - std. hours allowed)

15

VOH rate (spending) variance = ?

= Actual hours worked
* (actual rate - std. rate)

16

VOH efficiency variance = ?

= Std. rate
* (actual hours - std. hours allowed for actual production volume)

17

FOH budget (spending) variance = ?

= Actual fixed OH - Budgeted fixed OH

18

FOH volume variance

= Budgeted fixed OH - Std. fixed OH cost allocated to production

19

When standard costing is used, the application of overhead is accomplished in what two steps?

1) Calculated OH rate = budgeted OH costs / estimated cost driver

2) Applied OH = Std. cost driver for actual level of activity * OH rate (from step 1)

20

What does sales price variance measure?

The aggregate impact of a SP different from the budget

21

Sales price variance = ?

= (actual SP per unit - budgeted SP per unit) * actual sold units

22

Sales volume variance = ?

= (actual sold units - budgeted sales units) * std. CM per unit