Deck 6 Flashcards Preview

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Flashcards in Deck 6 Deck (20):
1

DM quantity usage variance =

Standard price x (Actual quantity used - standard quantity allowed)

2

DL rate variance =

Actual hours worked x (AR - SR)

3

DL efficiency variance =

Standard rate x (Actual hours worked - standard hours allowed)

4

VOH variance can be broken into two separate variances:

Rate (spending) variance and Efficiency variance

5

FOH variance can be broken into two separate variances:

Budget (spending) variance and Volume variance

6

VOH rate (spending) variance =

Actual hours x (AR - SR)

7

VOH efficiency variance =

Standard rate x (Actual hours - standard hours allowed for actual production volume)

8

FOH budget (spending) variance =

Actual FOH - Standard FOH

9

FOH volume variance (aka production volume variance) =

budgeted FOH - standard FOH allocated to production

10

Applied OH under standard costing =

Standard cost driver for actual activity x OH rate

11

Production volume variance =

(Actual production - budgeted production) x per unit standard FOH rate

12

Sales price variance =

(Actual SP - budgeted SP) x actual sold units

13

Sales volume variance =

(Actual sold units - budgeted sold units) x standard contribution margin per unit

14

Strategic business units are classified by 4 financial measures:

1. Cost SBU (lowest level), 2. Revenue SBU, 3. Profit SBU, and 4. Investment SBU (highest level)

15

4 critical success factors of a balanced scorecard

F: financial; I: internal business processes; C: customer satisfaction; and A: advancement of innovation and HR

16

Net Present Value =

Initial investment - PV of cash flows

17

Payback period =

Initial investment / cash inflows per period

18

Internal Rate of Return (IRR) can be misleading when there are:

Alternating periods of cash inflows and outflows

19

IRR =

Net incremental investment / Net annual cash flows

20

Positive NPV will occur when:

IRR is greater than required rate of return