Costing System and variance Flashcards
(6 cards)
Absorption (full) costing
Includes all variable + fixed manufacturing costs in product cost
Marginal (variable) costing
Inventory valued at variable manufacturing cost; fixed manufacturing cost expensed in period
Overhead Absorption Rate (OAR)
Budgeted overhead ÷ Budgeted activity base (e.g. machine‑hours)
Standard cost
Pre‑set unit cost used as a benchmark; variance = Actual – Standard
Price variance
(Actual – Standard price) × Actual quantity
Usage / Efficiency variance
(Actual – Standard quantity) × Standard price