1. Standard Costing System Chapter 4 Managerial Accounting Concepts and Empirical Evidence

2. Standard Costing Variances Standard Cost Variances Price Quantity Rate Efficiency Spending Efficiency Budget Volume Material Variances Overhead (Indirect Costs) Variances Labor Variances

6. Analysis of Differences (Variances) between Actuals and Standards, Ren Corporation Cutting Dept Materials 1) 5,200 (AQ)  $ 21 (AP) = $ 109,000 2) 5,200 (AQ)  $ 20 (SP) = $ 104,000 Price Variance (1-2) Unfavorable = $ 5,200 Quantity Variance(3-4) Unfavorable = $ 4,80 3) 4,824 (AU)  $ 20 (SP) = $ 96,480 4) 4,800 (SQ)  $ 20 (SP) = $ 96,000

7. Analysis of Differences (Variances) between Actuals and Standards, Ren Corporation Cutting Dept Labor 1) 9,500 (AQ)  $ 16 (AP) = $ 152,000 2) 9,500 (AQ)  $ 15 (SP) = $ 142,500 Rate Variance (1-2) Unfavorable = $ 9,500 3) 9,600 (SQ)  $ 16 (SP) = $144,000 Efficiency Variance(2-3) Favorable = $ (1,500) 2 hrs Req. per desk * 4,800 desk = 9,600 standard req. hrs for the level of production achieved

8. Analysis of Differences (Variances) between Actuals and Standards, Ren Corporation Cutting Dept Variable Overhead 1) 9,500 (AQ)  $ 1.80 (AP) = $ 17,100 2) 9,500 (AQ)  $ 1.50 (SP) = $ 14,250 Spending Variance(1-2) Unfavorable = $ 2,850 3) 9,600 (SQ)  $ 1.50 (SP) = $14,400 Efficiency Variance(2-3) Favorable = $ (150)

9. Analysis of Differences (Variances) between Actuals and Standards, Ren Corporation Cutting Dept Fixed Overhead 1) Actual fixed overhead = $ 4,900 2) Budgeted Fixed overhead = $ 5,000 Budget Variance (1-2) Favorable = $ (100) 3) Standard Fixed overhead = $4,800 for the level of production achieved ($ 0.50 * 9,600) Volume Variance(2-3) unfavorable = $ 200