Test 4 Flashcards
Equation to reconcile direct costing income to absorption costing income
DIR = ABS + FC (Beg) - FC (End)
Equation to reconcile absorption costing income to direct costing income
ABS = DIR - FC (Beg) + FC (End)
What is a relevant cost?
A relevant cost is a cost or revenue that changes as a result of a decision.
DM Flex Budget Variance
DM Flex Budget Variance = DM Price Variance + DM Quantity Variance
DM Price Variance
DM Price Variance = Actual Quantity Purchase (Actual Price - Standard Price)
DM Quantity Variance
DM Quantity Variance = Standard Price (Actual Quantity Used - Standard Quantity Variance)
VOH Spending Variance
VOH Spending Variance = Actual Hours (Actual Rate - Standard Rate)
VOH Efficiency Variance
VOH Efficiency Variance = Standard Rate (Actual Hours - Standard Hours Allowed)
FOH Budget Variance
FOH Budget Variance = FOH Budget - FOH Actual
FOH Volume Variance
FOH Volume Variance = FOH Budget - FOH Applied
DL Flex Budget Variance
DL Flex Budget Variance = DL Rate Variance + DL Efficiency Variance
DL Rate Variance
DL Rate Variance = Actual Hours (Actual Rate - Standard Rate)
DL Efficiency Variance
DL Efficiency Variance = Standard Rate (Actual Hours - Standard Hours Allowed)
Static Budget
A type of budget that incorporates anticipated values about inputs and outputs that are conceived before the period in question begins.
Flexible Budget
A flexible budget is a budget that adjusts or flexes for changes in the volume of activity. The flexible budget is more sophisticated and useful than a static budget, which remains at one amount regardless of the volume of activity.
