standard costing and variance analysis Flashcards Preview

MANAGERIAL ACCOUNTING > standard costing and variance analysis > Flashcards

Flashcards in standard costing and variance analysis Deck (40):
0

what is variance a account

difference between standard costs and and actual costs

1

General format of a performance report

revenue or cost
budget amount
actual amount
variance
explanation

2

types of overhead

variable overhead and fixed overhead

3

when is variance favorable

actual costs < budgeted costs
actual revenues > budgeted revenues

4

when is variance unfavorable

actual costs > budgeted costs
actual revenues < budgeted revenues

5

what is flexible budget

budget that shows revenues and expenses that should have occurred riven the actual activity level

6

what do we need to know to flex a budget

variable costs change in direct proportion to changes in activity

fixed costs remain unchanged

7

what is the basic idea of variance analysis

we can split up the overall difference between standard costs and actual costs in variances that are interpretable and meaningful

8

types of standard cost variance

price variance and quantity variance

9

what's price variance

the difference between the actual price and the standard price

10

quantity variance

the difference between the actual quantity and the standard quantity

11

what's standard price

amount that should have been paid for the resources acquired

12

standard quantity

standard quantity is the quantity that should have been used for the output achieved

13

formula for price variance

AQ(AP-SP)

14

quantity variance

SP(AQ-SQ)

15

what's journal entry for recording the purchase of materials (taking into accounts variance)

dr direct material
cr accounts payable
cr price variance on direct materials


if more was spent than the standard

16


Actual hours (SP-AP)

what's rate variance

17

what's efficiency variance

SP(SH-AH)

18

what is POHR typical based on

input activity measure
e.g. machine hours, direct labor hours, euros

19

what's variable overhead spending

AH(standard rate - actual rate)

20

what's efficiency variable

standard rate(SH-AH)

21

what's the journal entry to record actual variable overhead cost

dr variable manufacturing overhead cost
cr. accounts payable

22

what's the journal entry to record the application of variable manufacturing overhead

dr work in process
cr variable manufacturing overhead applied

23

what's the journal entry to isolate variable overhead variances for the period

dr variable manufacturing overhead applied
spending variance on bar. mnf. overhead
cr variable manufacturing overhead incurred
efficiency variable on var, mnf

24

what does the variance overhead efficiency variance reveal?

favorable variable overhead efficiency variance indicates that we used more direct labor hours than standard given actual output
therefore, we should expect higher overhead costs

25

types of fixed overhead variances

fixed overhead budget and volume

26

what does fixed overhead budget indicate

how much more or less we spent on fixed overhead than budgeted

27

what does fixed overhead volume variance indicate

difference between the budgeted overhead and the overhead allocated to products

28

how do you calculate fixed overhead budget variance

actual fixed overhead - budgeted fixed overhead

29

how do you calculate fixed overhead volume variance

budgeted fixed overhead - applied fixed overhead

30

how do you calculate applied fixed overhead

POHR x standard units of activity measure given actual output

31

what's the journal entry to record actual fixed manufacturing overhead costs

dr fixed manufacturing overhead cost
cr cash

32

what's the journal entry to record the application of fixed manufacturing overhead to work-in process

dr work in process
cr. fixed manufacturing overhead applied

33

what's the journal entry to isolate fixed overhead variances for the period

dr fixed manufacturing overhead applied
volume variance on fixed mnf overhead
cr fixed manufacturing overhead incurred
budget variance on fixed mnf overhead

34

actual overhead - applied overhead = favorable variance

overapplied overhead

35

actual overhead minus applied overhead

unfavorable : under applied overhead

36

what to do with unfavorable net variances cost of production

inefficiencies which should be recognized in current period

37

what to do with insignificant net favorable variances

included with costs of goods sold in income statement

38

what to do with significant favorable variances

allocate the favorable variance in inventory (WIP, FG) and costs of goods sold

39

what's segment margin

divisions contribution to overall operations