CH 9 Flashcards
variance analysis cycle starts with…
Function of variance analysis cycle?
evaluate and improve performance
planning budget?
budget created at the beginning of the budgeting period that is valid only for the planned level of activity.
Flexible Budget?
A report showing estimates of what revenues and costs should have been, given the actual level of activity for the period.
when is an EXPENSE “unfavorable”
when the acutal expense cost exceeds the flexible expense cost
when is an Revenue “favorable”
when the actual revenue sales exceeds the flexible revenue sales
Standard Quantity per Unit?
The amount of an input that should be required to complete a single unit of product,
including allowances for normal waste, spoilage, rejects, and other normal inefficiencies.
Standard Hours per Unit
The amount of direct labor time that should be required to complete a single unit of product,
including allowances for breaks, machine downtime, cleanup, rejects, and other normal inefficiencies
Price Variance?
A variance that is computed by taking the difference between the actual price and the standard price and multiplying the result by the actual quantity of the input
Quantity Variance?
A variance that is computed by taking the difference between the actual quantity of the input used and the amount of the input that should have been used for the actual level of output and multiplying the result by the standard price of the input.
