MA lecture 6 + workshop 5 Flashcards
tenta (14 cards)
What are the two main types of budgets?
Operating budgets and Financial budgets
Operating budgets focus on day-to-day operations, while financial budgets deal with the overall financial position.
What is a Master budget?
A comprehensive expression of operating and financial plans for a future period, usually 1 year, summarized in a set of budgeted statements
The master budget integrates all individual budgets into one overall budget.
Do standard costs have to be identical to historic costs?
No
Standard costs are often set for budgeting purposes and may differ from historical costs.
What is the formula to calculate unfavourable direct labor rate variance?
(Actual wage - Standard wage) * Actual labor hours
This variance indicates the difference between budgeted and actual labor costs.
When is the direct labor rate variance considered unfavourable?
When the actual wage is higher than the standard wage
Indicates higher costs than planned, impacting profitability.
When is the direct labor rate variance considered favourable?
When the actual wage is lower than the standard wage
Indicates lower costs than planned, benefiting profitability.
What is the calculation for unfavourable direct labor rate variance using specific figures?
Actual wage * Actual labor hours - Standard wage * Actual labor hours
In the example, if actual wage is 104628 and standard wage is 21.50, it results in a variance of 10028.
What is the formula for calculating favourable direct labor efficiency?
(Actual labor hours - Standard labor hours) * Planned wage
Planned wage is equivalent to the standard wage in this context.
What happens if actual labor hours exceed standard labor hours?
It results in an unfavourable direct labor efficiency
This indicates that more labor hours were used than budgeted.
What are the different kinds of budgets mentioned?
- Revenue budget
- Cost budgets
- Income budgets
- Capital budgets
Each type of budget serves a specific purpose in financial planning.
What are the two types of budgets used in variance analysis?
Static budget and Flexible budget
Static budgets remain unchanged, while flexible budgets adjust based on actual activity levels.
Fill in the blank: The _______ is the difference between what was budgeted and what was ultimately incurred as costs.
unfavourable direct labor rate variance
This variance reflects the inefficiency in labor costs relative to what was planned.
How do you determine if the labor hours were accurately estimated?
By comparing actual labor hours to standard labor hours
If actual labor hours are correctly estimated, the variance will be favourable.
What is the outcome if actual labor hours are underestimated?
It could lead to an unfavourable direct labor efficiency
This means the actual labor used exceeds the estimated budget.
