This document discusses standard costing and variance analysis. It provides learning objectives for the chapter that cover setting unit standards, using standard cost sheets, calculating variances, and preparing journal entries for variances. Examples are given for computing materials, labor, and overhead variances for a company called Blue-Corn Foods. Variances are decomposed into price, usage, rate, efficiency, spending, and volume components. The document aims to explain how variances are used for managerial control and performance evaluation.
The presentation explains that how Standard costing works in a organization with a illustration problem with that clear the conclusion of Standard costing
The presentation explains that how Standard costing works in a organization with a illustration problem with that clear the conclusion of Standard costing
Akuntansi Manajemen Edisi 8 oleh Hansen & Mowen Bab 4Dwi Wahyu
Materi Bab 4 Activity Based Product Costing, Akuntansi Manajemen buku Hansen & Mowen Edisi 8. Presentasi powerpoint oleh Gail B. Wright, Professor Emeritus of Accounting, Bryant University
Splunk SDKs make it faster and more efficient to program using the Splunk REST API using constructs and syntax familiar to developers who are experienced in Java, Python, JavaScript and PHP. This makes it easier to integrate data from Splunk with other applications across the enterprise.
Akuntansi Manajemen Edisi 8 oleh Hansen & Mowen Bab 4Dwi Wahyu
Materi Bab 4 Activity Based Product Costing, Akuntansi Manajemen buku Hansen & Mowen Edisi 8. Presentasi powerpoint oleh Gail B. Wright, Professor Emeritus of Accounting, Bryant University
Splunk SDKs make it faster and more efficient to program using the Splunk REST API using constructs and syntax familiar to developers who are experienced in Java, Python, JavaScript and PHP. This makes it easier to integrate data from Splunk with other applications across the enterprise.
BBA 2301, Principles of Accounting II 1 Course LeaCicelyBourqueju
BBA 2301, Principles of Accounting II 1
Course Learning Outcomes for Unit VIII
Upon completion of this unit, students should be able to:
7. Explain how financial information influences both short-term and long-term management decisions.
7.1 Describe the use of standard cost manufacturers and service businesses.
8. Discuss operational and capital budgets.
8.1 Describe capital budgeting methods.
8.2 Identify the use of intangible benefits in capital budgeting.
Course/Unit
Learning Outcomes
Learning Activity
7.1
Unit Lesson
Chapter 26, pp. 26-1 to 26-24
Webpage: Balanced Scorecard Basics
Video: What is a balanced scorecard: A simple explanation for anyone
Unit VIII Case Study
8.1
Unit Lesson
Chapter 27, pp. 27-1 to 27-19
Unit VIII Case Study
8.2
Unit Lesson
Chapter 27, pp. 27-1 to 27-19
Unit VIII Case Study
Required Unit Resources
Chapter 26: Standard Costs and Balanced Scorecard, pp. 26-1 to 26-24
Chapter 27: Planning for Capital Investments, pp. 27-1 to 27-19
In order to access the following resources, click the links below.
Balanced Scorecard Institute. (n.d.). Balanced scorecard basics. https://balancedscorecard.org/bsc-basics-
overview/
For the video resource below, a transcript and closed captioning are available upon accessing the video.
Marr, B. (2019, June 24). What is a balanced scorecard: A simple explanation for anyone [Video]. Cielo24.
https://c24.page/2s4pmxpj2kpwnprckg6p8tcjtu
Unit Lesson
Introduction
This final unit will conclude the study of managerial accounting. This lesson will share important content for
managers in manufacturing, merchandising, and service companies. Content includes estimating future costs,
implementing financial and non-financial performance measures, and incorporating capital budgeting.
Costing requires you to make estimates. As noted in a previous unit, many people are uncomfortable with this
task, as they are used to having objective numbers given to them. However, as much as the future is
UNIT VIII STUDY GUIDE
Management: Costs and Capital Investing
https://balancedscorecard.org/bsc-basics-overview/
https://c24.page/2s4pmxpj2kpwnprckg6p8tcjtu
BBA 2301, Principles of Accounting II 2
UNIT x STUDY GUIDE
Title
unpredictable, we are still required to use our experience and judgment to chart a path forward. In this unit,
you will learn about standard costs. Partially based on prior period actual costs, they provide the basis for
budgeting and subsequent evaluation. Management accountants, no matter the title, are integral to the
development of standard costs, implementation of the balanced scorecard, and the capital budgeting process.
Pay attention as you read, review, and evaluate this unit as it is almost wholly transferable to any company.
Consider the following questions and how you would respond to each as you move through this unit.
As the chief accounting officer (CAO) or chief ...
This insightful PowerPoint presentation provides a comprehensive overview of Chapter 10 from the field of Managerial Accounting, focusing on the important concepts of Standard costs and variances.Through visually engaging slides and concise explanations, this presentation covers the fundamental principles of costs and variances demonstrating their significance in assessing organizational performance. Gain insights into the process of developing flexible budgets, including variance analysis and the assessment of cost and variance behavior patterns. Gain a comprehensive understanding of how Standard costing and variances can be utilized as a strategic tool for driving organizational success.
Required ResourceTextSchneider, A. (2017). Managerial Accounti.docxaudeleypearl
Required Resource
Text
Schneider, A. (2017). Managerial Accounting: Decision making for the service and manufacturing sectors (2nd ed.) [Electronic version]. Retrieved from https://content.ashford.edu/
· Chapter 5: Joint Cost Allocation and Variable Costing
· Chapter 8: Cost Control Through Standard Costs
Recommended Resource
Multimedia
Crosson, S. (2007). PVA ABC JIT – 4 ABC example (Links to an external site.) [Video File]. Retrieved from http://www.youtube.com/watch?v=eyH4l3VvOCU
Discussion 1 Allocating Joint Costs
Describe the three methods used to allocate joint costs. What are the advantages/disadvantages of each allocation method? Which method would you recommend? Why? Support your position with evidence from the text or external sources. Your initial post should be 200-250 words.
Guided Response: Review several of your classmates’ postings. Respond to at least two of your classmates by asking a question to challenge their recommended allocation method. Support your question and/or comments with evidence from the text or external sources.
Discussion 2 Variable/Absorption Costing
As you read in Chapter 8, there are arguments (for and against) variable costing and absorption costing. Select one of these costing methods and explore the various arguments. Determine whether you are “for” or “against” this selected method. Provide evidence from the text to support your position. Your initial post should be 200-250 words.
Guided Response: Review several of your classmates’ postings. Respond to at least two of your classmates who explored a different costing method than your own by stating whether you agree or disagree with their position. Be sure to include cited support/examples to clarify your point of view.
LearningObjectives
After studying Chapter 8, you will be able to:
Explain the signi�icance of pro�it analysis for an organization.
Describe the major characteristics and conditions of a standard cost system.
Understand the information contained in a standard cost sheet.
Compute materials price and usage variances, and identify potential causes of such variances.
Compute labor rate and ef�iciency variances, and identify potential causes of such variances.
Explain the major considerations that are the basis of standard costs for overhead and compute
budget variances and capacity variances for overhead.
Explain why the capacity variance is related only to �ixed overhead costs.
Understand issues relating to variance investigation and disposal of variances.
8 Cost Control Through Standard Costs
nd3000/iStock/Thinkstock
Explain how standard costs can be used in various different settings.
Describe ethical considerations relating to standards and variances.
WhereDoIStartWithStandardCosts?
Jean-Claude Recca, President of Rue de Lorraine, a chain of fast-food restaurants in central France, just
returned from a reunion of his INSEAD graduating class. During the day of activities in the Riviera, he talked
with several o ...
Confirming Pages CHAPTER OUTLINE Overview of Variab.docxmaxinesmith73660
Confirming Pages
CHAPTER OUTLINE
Overview of Variable and Absorption Costing
• Variable Costing
• Absorption Costing
• Selling and Administrative Expenses
Variable and Absorption Costing—An Example
• Variable Costing Contribution Format Income Statement
• Absorption Costing Income Statement
Reconciliation of Variable Costing with Absorption
Costing Income
Advantages of Variable Costing and
the Contribution Approach
• Enabling CVP Analysis
• Explaining Changes in Net Operating Income
• Supporting Decision Making
• Adapting to the Theory of Constraints
Segmented Income Statements and the Contribution
Approach
• Traceable and Common Fixed Costs and the Segment Margin
• Identifying Traceable Fixed Costs
• Traceable Costs Can Become Common Costs
Segmented Income Statements—An Example
• Levels of Segmented Income Statements
• Segmented Income Statements and Decision Making
Segmented Income Statements—Common Mistakes
• Omission of Costs
• Inappropriate Methods for Assigning Traceable Costs among
Segments
• Arbitrarily Dividing Common Costs among Segments
Income Statements—An External Reporting Perspective
• Companywide Income Statements
• Segmented Financial Information
Variable Costing and
Segment Reporting:
Tools for Management 6
A LOOK AT THIS CHAPTER
This chapter explains how to use
the contribution format to create
variable costing income statements
for manufacturers and segmented
income statements. It also contrasts
variable costing income statements and
absorption income statements.
A LOOK AHEAD
Chapter 7 describes the budgeting
process.
A LOOK BACK
Chapter 5 explained how to compute
a break-even point and how to
determine the sales needed to achieve
a desired profit. We also described
how to compute and use the margin of
safety and operating leverage.
bre25419_ch06_236-281.indd 236bre25419_ch06_236-281.indd 236 12/8/11 3:48 PM12/8/11 3:48 PM
Confirming Pages
237
DECISION FEATURE LEARNING
OBJECTIVES
After studying Chapter 6,
you should be able to:
LO1 Explain how variable
costing differs from absorp-
tion costing and compute
unit product costs under
each method.
LO2 Prepare income
statements using both vari-
able and absorption costing.
LO3 Reconcile variable
costing and absorption
costing net operating
incomes and explain why
the two amounts differ.
LO4 Prepare a segmented
income statement that
differentiates traceable
fixed costs from common
fixed costs and use it to
make decisions.
IBM’s $2.5 Billion Investment in Technology
When it comes to state-of-the-art in automation, IBM’s $2.5 billion semiconductor manufacturing
facility in East Fishkill, New York, is tough to beat. The plant uses wireless networks, 600 miles of cable,
and more than 420 servers to equip itself with what IBM claims is more comput.
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
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Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
Resume
• Real GDP growth slowed down due to problems with access to electricity caused by the destruction of manoeuvrable electricity generation by Russian drones and missiles.
• Exports and imports continued growing due to better logistics through the Ukrainian sea corridor and road. Polish farmers and drivers stopped blocking borders at the end of April.
• In April, both the Tax and Customs Services over-executed the revenue plan. Moreover, the NBU transferred twice the planned profit to the budget.
• The European side approved the Ukraine Plan, which the government adopted to determine indicators for the Ukraine Facility. That approval will allow Ukraine to receive a EUR 1.9 bn loan from the EU in May. At the same time, the EU provided Ukraine with a EUR 1.5 bn loan in April, as the government fulfilled five indicators under the Ukraine Plan.
• The USA has finally approved an aid package for Ukraine, which includes USD 7.8 bn of budget support; however, the conditions and timing of the assistance are still unknown.
• As in March, annual consumer inflation amounted to 3.2% yoy in April.
• At the April monetary policy meeting, the NBU again reduced the key policy rate from 14.5% to 13.5% per annum.
• Over the past four weeks, the hryvnia exchange rate has stabilized in the UAH 39-40 per USD range.
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
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What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
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how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
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Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
3. 3
1. Tell how unit standards are set; why
standard costing systems are adopted.
2. State the purpose of a standard cost sheet.
3. Describe basic concepts underlying
variance analysis & explain how they are
used for control.
LEARNING OBJECTIVESLEARNING OBJECTIVES
Continued
4. 4
4. Compute materials & labor variances;
explain how they are used for control.
5. Calculate variable & fixed overhead
variances & give their definitions.
6. Prepare journal entries for variances
(Appendix).
LEARNING OBJECTIVESLEARNING OBJECTIVES
Click the button to skip
Questions to Think About
5. 5
QUESTIONS TO THINK ABOUT:
Blue Corn Foods
What motivated Rosita to
implement a more formal cost
control system?
6. 6
QUESTIONS TO THINK ABOUT:
Blue Corn Foods
Why does a standard cost system
provide more detailed control
information?
7. 7
QUESTIONS TO THINK ABOUT:
Blue Corn Foods
What type of control is being
exercised with the use of
standards?
8. 8
QUESTIONS TO THINK ABOUT:
Blue Corn Foods
How can standards be used to
control costs?
9. 9
1
Tell how unit standards
are set; why standard
costing systems are
adopted.
LEARNING OBJECTIVELEARNING OBJECTIVE
12. 12
Where do quantity & price
standards come from?
Quantity standards come from
experience, studies, & personnel.
Price standards come from
operations, purchasing, personnel,
& accounting.
LO 1
13. 13
What is the difference
between ideal and
attainable standards?
Ideal standards only work under
perfect conditions. Attainable
standards can be achieved under
efficient operating conditions.
LO 1
14. 14
STANDARD COST SYSTEMS
Why adopt a standard cost system?
For planning & control
To improve performance measures
To give manager more information by decomposing
total variances into price & usage variances
For product costing
To use unit cost system that is readily available in
pricing
LO 1
16. 16
2 State the purpose of a
standard cost sheet.
LEARNING OBJECTIVELEARNING OBJECTIVE
17. 17
STANDARD COST PER UNIT:
Definition
STANDARD COST PER UNIT:
Definition
Is the sum of standards costs for
direct materials (DM), direct
labor (DL), & overhead.
LO 2
18. 18
BLUECHITO COST SHEET
LO 2
EXHIBITEXHIBIT 9-29-2
Standard cost sheet
provides details for
standard cost
measures.
21. 21
FAVORABLE & UNFAVORABLE
The difference between actual &
planned can be favorable (actual
price or usage < standard) or
unfavorable (actual price or usage
> standard). Does not mean good or
bad!
The difference between actual &
planned can be favorable (actual
price or usage < standard) or
unfavorable (actual price or usage
> standard). Does not mean good or
bad!
LO 3
22. 22
What should we do when
we find variances?
If variances are significant, that is
if they are beyond our control
limits, they should be investigated
if it is cost beneficial to do so.
LO 3
23. 23
FORMULA: Total Variance
Total variance is Actual cost – Applied cost or
Total cost – Standard cost.
LO 3
Total Variance
= (AP X AQ) – (SP X SQ)
= Actual price x Actual quantity
– Standard Price x Standard Quantity
24. 24
How can we make total
variances more useful?
Total variances provide more
information if they are divided
into Price variances & Efficiency
variances.
LO 3
26. 26
FAVORABLE & UNFAVORABLE
Repeat: The difference between
actual & planned can be favorable
(actual price or usage < standard)
or unfavorable (actual price or
usage > standard). Does not mean
good or bad!
Repeat: The difference between
actual & planned can be favorable
(actual price or usage < standard)
or unfavorable (actual price or
usage > standard). Does not mean
good or bad!
LO 4
27. 27
BLUE-CORN FOODS, INC.:
Background
BLUE-CORN FOODS, INC.:
Background
LO 4
Information for actual
production, cost of
corn, & inspectors.
Actual production 48,500 bags corn chips
Actual cost of corn 780,000 ounces @ $0.0069
Actual cost of inspectors 360 hours @ $7.35 = $2,646
28. 28
TOTAL MATERIALS & LABOR
VARIANCES
LO 4
EXHIBITEXHIBIT 9-59-5
Compares actual costs
with budgeted costs at
level of production.
30. 30
FORMULA: Materials Price
Variance (MPV)
Materials price variance tells whether a
company paid more than expected for raw
materials.
LO 4
MPV
= (AQ X AP) – (AQ X SP)
= (AP – SP)AQ
= ($0.0069 - $0.0060) 780,000
= $ 702 U
32. 32
MPV AS PERFORMANCE
EVALUATION
Limitations on using price variance in
performance evaluation: buying lower
quality or too much inventory. Results
of investigation show shortage of usual
grade of corn; purchasing agent has no
control over supply.
Limitations on using price variance in
performance evaluation: buying lower
quality or too much inventory. Results
of investigation show shortage of usual
grade of corn; purchasing agent has no
control over supply.
LO 4
33. 33
FORMULA: Materials Usage
Variance (MUV)
Materials usage variance tells whether a company
used more raw materials than expected.
LO 4
MUV
= (AQ X SP) – (SQ X SP)
= (AQ – SQ)SP
= (780,000 – 873,000) $0.006
= $ 558 F
34. 34
What is the percentage &
source of the favorable
MUV?
The 10.7% favorable MUV
results from higher quality
corn.
LO 4
37. 37
FORMULA: Labor Rate Variance
(LRV)
Labor rate variance tells whether a company
paid more than expected for labor.
LO 4
LRV
= (AH X AR) – (AH X SR)
= (AR – SR)AH
= ($7.35 - $7.00) 360
= $ 126 U
38. 38
What is the percentage &
source of the unfavorable
LRV?
The 5% favorable MUV
results from market forces
& unexpected overtime.
LO 4
39. 39
FORMULA: Labor Efficiency
Variance (LEV)
Labor efficiency variance tells whether a
company used more labor than expected.
LO 4
LEV
= (AH X SR) – (SH X SR)
= (AH – SH)SR
= (360 – 339.5) $7
= $ 143.50 U
40. 40
What is the percentage &
source of the unfavorable
LEV?
The 6% favorable LEV
resulted from machinery
breakdown.
LO 4
41. 41
Who is responsible for a
labor efficiency variance?
The Production &
Maintenance Managers.
LO 4
43. 43
VARIABLE OVERHEAD: Background
LO 5
Variable overhead rate (standard) $3.85 per DLH
Actual variable overhead costs $1,600
Actual hours worked (machining & inspection) 400
Bags of chips produced 48,500
Hours allowed for production 378.3
Applied variable overhead $1,456
44. 44
FORMULA: Total Variable
Overhead Variance
Total overhead variance is the difference
between actual and applied variable
overhead.
LO 5
Total Variable Overhead
= Actual – Applied Overhead
= $1,600 - $1,456
= $ 144 U
46. 46
FORMULA: Variable Overhead
Spending Variance
Variable overhead spending variance
measures aggregate effect of actual variable
overhead rate with standard rate.
LO 5
Spending Variance
= (AVOR X AH) – (SVOR X AH)
= (AVOR – SVOR)AH
= ($4.00 - $3.85) 400
= $ 60 U
47. 47
VARIABLE OVERHEAD
SPENDING VARIANCE
Variable overhead spending variance
arises because prices change. It
includes things such as indirect
materials, indirect labor, electricity
maintenance, etc. Increase or decrease
in these items is beyond control of
managers.
Variable overhead spending variance
arises because prices change. It
includes things such as indirect
materials, indirect labor, electricity
maintenance, etc. Increase or decrease
in these items is beyond control of
managers.
LO 5
48. 48
FORMULA: Variable Overhead
Efficiency Variance
Variable overhead efficiency variance
measures change in variable overhead
consumption because relies on direct labor.
LO 5
Efficiency Variance
= (AH – SH)SVOR
= (400 – 378.3) $3.85
= $ 84 U
49. 49
FIXED OVERHEAD: Background
LO 5
Budgeted fixed overhead $749,970
Practical activity 23,400 DLH
Standard fixed overhead rate $32.05
Actual Results
Actual production 2,750,000 bags of chips
Actual fixed overhead cost $749,000
Standard hours allowed for actual production 21,450
Budgeted or Planned Items
51. 51
FORMULA: Total Fixed
Overhead Variance
Total fixed overhead variance is the difference
between actual and applied fixed overhead.
LO 5
Total Fixed Overhead Variance
= Actual – Applied Overhead
= $749,000 - $687,473
= $ 61,527 Underapplied
52. 52
FIXED OVERHEAD VARIANCES
LO 5
EXHIBITEXHIBIT 9-119-11
Decompose total
fixed overhead
variance into
spending &
volume variances.
53. 53
FIXED OVERHEAD SPENDING
VARIANCE
Fixed overhead spending variance is the
difference between actual and
budgeted fixed overhead. It includes
things such as salaries, depreciation,
taxes, and insurance. Increase or
decrease in these items is beyond
control of managers.
Fixed overhead spending variance is the
difference between actual and
budgeted fixed overhead. It includes
things such as salaries, depreciation,
taxes, and insurance. Increase or
decrease in these items is beyond
control of managers.
LO 5
54. 54
FORMULA: Fixed Overhead
Volume Variance
Fixed overhead volume variance measures the
effect of actual output differing from output
used to compute predetermined standard fixed
overhead rate.
LO 5
Volume Variance
= Budgeted – Applied fixed overhead
= $479,970 - $687,473
= $62,497 U
56. 56
JOURNAL ENTRIES
Blue Corn must write journal entries
to enter information for variances
into accounting records. Variances
are closed into Cost of Goods Sold.
Blue Corn must write journal entries
to enter information for variances
into accounting records. Variances
are closed into Cost of Goods Sold.
LO 6