A. Cost Accounting for decision and control Flashcards

Question

What is a curvilinear variable cost?

Answer 1

aka economies of scale - non-linear variable costs - successive unit adds less to total variable cost than previous unit

Answer 2

each successive unit of activity adds more to the total variable cost than the previous unit

Answer 3

semi-fixed, hybrid or mixed cost - partially affected by activity level e. g gas, electricity

Answer 4

material: bought for manufacturing labour: staff costs expense: incurred in running business e.g rent, insurance

Answer 5

direct costs:can be traced to cost object (prime cost) vs indirect costs:can't be directly traced to a single cost e.g overheads product costs:costs only incurred if production takes place vs period costs:incurred due to passage of time

Answer 6

product/direct costs

Answer 7

determine the full production cost per unit | -focus on production costs only

Answer 8

production costs + non-production costs

Answer 9

direct materials per unit + direct labour per unit + production overhead per unit

Answer 10

total budgeted overhead costs (allocated and apportioned) divided by budgeted production volume

Answer 11

(budgeted overhead rate per unit x actual units) - actual overheads incurred difference between premeditated and actual

Answer 12

- take fixed production costs into account which are excluded from product costs usually - follows matching/ACCRUAL concept as inv items are matched against sales value when items are sold - fixed production overheads should be included in financial statements - analysis of over/under absorbed overheads may be useful in identifying inefficient utilisation of production resources - argument that in the longer term, all costs are variable and it is appropriate to try to identify overhead costs with the products or services that cause them

Answer 13

- apportionment and absorption of overhead costs is arbitrary - profits vary with changes in production volume

Answer 14

costing method which changes products or services with variable costs alone -fixed costs are treated as period costs and are written off in total against contribution of the period

Answer 15

extra cost arising as a result of producing one more unit or the cost saved as a result of producing one less unit -good way to provide short term decision making activity

Answer 16

direct material direct labour variable overheads

Answer 17

- simpler costing system as costs don't need to be apportioned and absorbed overhead - marginal costing reflects the behaviour of costs in relation to activity, useful in SR decision making

Answer 18

- when FIXED costs are HIGH relative to variable costs and when overheads are high relative to direct costs, marginal cost of production and sales is only a small proportion of total costs. not useful for LT decision making - treatment of direct labour costs as a variable cost item is often UNREALISTIC

Answer 19

the (increase)/decrease in inventory x fixed overheads per unit

Answer 20

short term:depends on inv increase or reduction. Marginal and absorption systems give same profit when there is no change in inventories long term: total reported profit will be the same whichever method is used

Answer 21

costs-ensure price is sufficient to cover the cost of producing the product or providing the service competitors-monitor, set in line with goals customers-value placed on product, price they are willing to pay corporate objectives-link to strategic decisions 4Cs

Answer 22

adding a markup to the cost of the product or service in order to arrive at selling price

Answer 23

- amount customers are willing to pay - level of competition i.e substitutes, competitors - organisation's objectives - may be fixed mark up for company can make a specific return

Answer 24

selling price= full cost per unit x (1 + %)

Answer 25

1. required profit will be made if budgeted sales volumes are achieved 2. particularly useful method in CONTRACT COSTING industries such as building where a few large individual contracts can consume majority of the annual fixed costs and the fixed costs are low in relation to the variable costs 3. Assuming the organisation knows its cost structures, full cost-plus is QUICK & CHEAP to employ, saving management time 4. Full cost-plus pricing can be useful in JUSTIFYING selling prices to customers; if costs can be shown to have increase, this strengthens the case for an increase in the selling price

Answer 26

1. Issues with SELECTION of 'suitable' basis on which to charge fixed costs to individual products or services 2. Prices set on the basis of NORMAL VOLUME, and actual volume turns out to be considerable lower, overheads will not be fully recovered from sales and predicted profits may not be attainable 3. Mark up can be very ARBITRARY and may not properly account for factors such as competition levels, how much customers are willing to pay etc

Answer 27

selling price = marginal cost per unit x (1+mark up percentage)

Answer 28

1. Just as accurate as total cost-plus pricing 2. Knowledge of marginal cost gives management the option of pricing below total cost when times are bad, to fill total capacity 3. Particularly useful in pricing specific one-off contracts because it only account for costs which are likely to change because of the new contract 4. recognises the existence of scarce or limiting resources

Answer 29

1. Like any cost based pricing method, ignores EXTERNAL factors such as levels of competition, customer attitudes 2. Mark-up becomes even MORE ARBITRARY than that used in full cost plus as now it must also include subjective element which allows for the selling price to cover fixed costs

Answer 30

targeted return on investment in the product/budgeted level of production

Answer 31

targeted return on investment in the product= total investment in the product x targeted rate of return

Answer 32

selling price = total cost / (1-required margin)

Answer 33

Automation means: -more indirect overheads (insurance, dep) -less direct labour costs -absoption rate is not volume based anymore (AC) => traditional methods of costing are less useful

Answer 34

- indirect OH is largest cost of production in one figure that lacks detail and is not useful in management - management does not know what the components are of the largest production cost (indirect OHs) they cannot implement proper cost control - costs are often allocated between products on the basis of direct labour hours-despite the fact that direct labour becomes smaller proportion of costs and doesn't fairly reflect the relationship between the products and the indirect overheads - because costs are inappropriately or inaccurately shared between products it means that the total production cost can be wrong which can lead to poor pricing and production decisions

Answer 35

cannot calculate a 'true' product cost that has any valid meaning

Answer 36

VC small in relation to FC | FC might be fixed in relation to production volume but they might vary with other activities that are not volume-related

Answer 37

- alternative approach to product costing - rather than absorbing OHs on a production volume basis, it firstly allocates them to cost pools before absorbing them into units using cost drivers - originally developed for manufacturing companies

Answer 38

an activity that consumes resources and for which overhead costs are identified and allocated. -each cost pool has a cost driver

Answer 39

unit of activity that consumes resources | -factor influencing level of cost

Answer 40

Must select one through ABC analysis

Answer 41

LOGICAL transactions:moving materials or people, tracking BALANCING transactions: ensuring necessary resources are available QUALITY transactions:ensuring quality requirements are met e.g inspections, handling customer complaints CHANGE transactions: activities required to respond to changes in customer demand, change in design, change in production method LBQC

Answer 42

must be: - relevant:connection between the cost driver and consumption of resources for the activity - easy to measure:measuring the units of cost driver and identifying the products or services to which they relate needs to be a fairly easy and straightforward process

Answer 43

TRANSACTION drivers:cost of an activity is affected by the number of times a particular action is undertaken DURATION driver:cost of activity is not much affected by the number of times the action is taken INTENSITY driver: efforts would be directed at determining what resources were used in the making of a product/service

Answer 44

Transaction

Answer 45

1. Group production OHs into activities, according to how they re driven 2. Identify cost drivers for each activity i.e what causes these activity costs to be incurred 3. Calculate a cost driver rate for each activity 4. Absorb the activity costs into the product 5. Calculate the full production cost and/or P&L

Answer 46

ABC, only use when apporpriate

Answer 47

- indirect costs are high relative to direct costs - products or services are complex - products or services are tailored to customer specifications - come products or services are sold in large numbers but others are sold in small numbers

Answer 48

UNIT-level activities-where consumption of resources is very strongly correlated with the number of units produced BATCH-level activities-where the consumption of resources is very strongly correlated with the number of batches produced PRODUCT-level activities- where consumption of resources may be related to the existence of particular products FACILITY level activities-where the cost cannot be related in any way to the production of any particular product line FPUB

Answer 49

facility level activity

Answer 50

unit-level activity

Answer 51

the proportion of overhead costs that falls into each of the four categories - if OH is primarily unit or facility level, cost will be similar - if OH cost falls into batch level or product level, difference would be significant

Answer 52

'an approach to the costing and monitoring of activities which involves -tracing resource consumption and costing final outputs. Resources are assigned to activities, and activities to cost objects based on consumption estimates. The latter utilise cost drivers to attach activity costs to outputs'

Answer 53

- more accuracy - better cost understanding - fairer allocation of costs - better cost control - can be used in complex situations - can be applied beyond production - can be used in service industries

Answer 54

- not always relevant - still need arbitrary cost allocations - need to choose appropriate drivers and activities - complex - expensive to operate

Answer 55

- pricing can be based on more realistic cost data:better pricing decisions - sales strategy can be more soundly based:better at targeting - improved decision making:research, production and sales effort can be directed to those offering the highest sales margin - performance management can be improved:enhanced due to focus and can be used as basis of budgeting and longer term forward planning of oh costs

Answer 56

specific order costing | continuous costing

Answer 57

- costs of distinct products or services are collected | e. g job costing, batch costing usually associated with absorption or ABC

Answer 58

- where a series of similar products or services are produced i.e costs are averaged over the number of products or services e. g joint product costing

Answer 59

individual products-use job costing groups of diff products - batch costing used identical products from single production process-process costing used

Answer 60

products produced at same time in same process before being separated for sale or further use - main products e. g carbonated drinks using common start before syrup, sweetener and malt added

Answer 61

when joint products are seperated

Answer 62

total of the raw material, labour and OH costs incurred up to the initial split-off point

Answer 63

joint: cost of a process that results in more than one main product; before split off point common: cost relating to more than one product or service; wider term that doesn't relate to process e.g overheads

Answer 64

incidental to main product, low saleable value

Answer 65

- physical measurement - market value at point of separation - net realisable value

Answer 66

costs apportioned to units of output of each product

Answer 67

costs apportioned on the basis of the market value of each joint product at the point of separation

Answer 68

further costs after separation are deducted from the market value before costs are apportioned

Answer 69

- proceeds from sale of by-product may be treated as pure profit - proceeds from the sale, less any handling and selling expenses may be used to reduce the cost of the main products

Answer 70

premise: managers should aim to increase throughout while simultaneously reducing inventory and operational expense concepts: throughput, inventory and operating expenses

Answer 71

throughput contribution=revenue - direct material costs | -variable costs=direct material costs

Answer 72

maximise the measure of throughput contribution

Answer 73

non-material costs | -direct labour, rent, equipment depreciation

Answer 74

money business invests to buy the things that it intends to sell and money tied up in assets so that business can make the throughput -PPE

Answer 75

all the money a business spends to produce the throughput i. e converting inventory into throughput - not fixed costs, semi-variable

Answer 76

throughput contribution - operating expenses = net profit

Answer 77

throughput accounting is sometimes called this as it has similarities to concept of contribution - seen as marginal costing alternative - not accurate description: concept of product cost is rejected

Answer 78

no attempt to charge operating expenses to products | -contribution from whole product is calculated

Answer 79

purchase cost of materials and bought-in parts | -should not include other costs e.g labour

Answer 80

to maximise throughput contribution earned | -operating expenses are fixed annually

Answer 81

a constraint on contribution | -machine limit, lack of resources

Answer 82

1. identify the bottleneck constraint 2. calculate the throughout contribution per unit for each product 3. calculate the throughput contribution per unit for each bottleneck resource for each product 4. rank the products in order of the throughput contribution per unit of the bottleneck resource 5. allocate resources using this ranking and answer the question

Answer 83

TP contribution/product's time on the bottleneck resource

Answer 84

total factory cost/total time on the bottleneck resource

Answer 85

return per factory hour/cost per factory hour

Answer 86

the value added by the org | -managers are encouraged to maximise this

Answer 87

the cost of operating the factory in terms of OHs, labour costs etc

Answer 88

return from product against cost of running factory - aim for more than one - however can't focus on return of one product vs cost of factory as a whole

Answer 89

- concentrates on short term:resources and operating expenses are fixed here - more difficult to apply TPA to longer term where costs are variable - more suitable for profit and performance in short term - ABC more appropriate for measuring and controlling performance from a longer-term perspective

Answer 90

product that is stored, delivered and consumed in an electronic format - games, apps, music - could be made of a bundle of features, which need to be costed separately

Answer 91

- 0 marginal costs and most costs are likely fixed:expensive to make but cheap to reproduce - no standard time or cost attributed to product - difficult to determine OH divers - timing of costs hard to pinpoint, can span over many acc periods - lifespan of products can vary:hard to determine cost over lifespan - features/functions might be shared amongst a number of products

Answer 92

- high fixed, upfront (sunk) | - low marginal, cheap to reproduce

Answer 93

- staff costs:project, product specific, upfront - infrastructure, platform & payment types:where app is hosted and cost of that and cost of collecting payment - functionality:reusable, shared - deign & development:shareable design elements - marketing:fixed market budget, pre-launch - IT support services & testing:for infrastructure, updates to API and fix bugs, post launch costs - royalty and license costs:hard to budget as sales dependent, license fees are fixed - inventory costs:no inv, avoids need for holding and valuation of inv - administrative services:good dashboard to effectively administer app, expensive to implement

Answer 94

sunk: ignored marginal: considered

Answer 95

- timing and FREQUENCY of costs will be difficult to estimate:some upfront, some ongoing and some one-off - some costs for SHARED functions e.g payments, digital images - determining BENEFITS will be complicated due to unknown lifespan of the product

Answer 96

systems that use product designs and specifications alongside web connections to markets and suppliers to provide real time cost information on components and product parts - used for products with large amount of parts - more details on marginal, total and average product costs

Answer 97

- gather info in real time from suppliers and marketplaces - built in analytics and intelligence capabilities - more advanced systems can make suggestions on buying behaviour - cope with hundreds of purchasing decisions at one time - more detailed breakdown of OHs and personalised cost drivers - can make granular decisions

Answer 98

- automatic, quick and cheap comparisons lead to cost savings - quicker lead times and low operational costs - no human labour to calculate - better understanding of flexibility and nature of costs - use suggestions to achieve improves, cheaper and more efficient operations - easy to used and quickly understood by users - better knowledge of drivers and absorption of costs - detailed breakdowns help cost control and pricing decisions - better customer profitability evaluation

Answer 99

a system that is used when the selling price is less controllable so profit is dependent on meeting a TARGET COST rather than changing selling price -work backwards from desired profit to find desired cost

Answer 100

compare predetermined costs of products/services to actual costs incurred

Answer 101

the predetermined cost of a product/service | -based on either absorption costing or marginal costing

Answer 102

the difference between the standard cost and actual cost

Answer 103

'benchmark measurement of resource usage or revenue or profit generation, set in defined conditions'

Answer 104

expected price for selling the standard product or service

Answer 105

s.p - cost in absorption costing

Answer 106

s.p - variable costs (marginal costing)

Answer 107

ideal: 100% perfect condition 100% of the time, no waste basic: long term standards, unchanged over years, shows trends current: based on current working conditions, useful when anomalies arise attainable: based on efficient but not perfect operating conditions, includes allowances, most popular

Answer 108

ideal: demotivate, standards may seem too perfect basic: demotivate if they become too easy to achieve, boring current: demotivate, not challenging as based on current attainable: motivate as it provides realistic target

Answer 109

'evaluation of performance by means of variances, whose timely reporting should maximise the opportunity for managerial action' -process by which the total difference between actual cost and standard is broken down into its different elements

Answer 110

when actuals are better than expected

Answer 111

when actuals are worse than expected

Answer 112

Budget control - controlling total costs across an area of responsibility - more flexible and can be used across variety of activities - does not provide basis for measuring efficiency - operates outside accounting systems SC and VA - unit costs - standardised expectations - provides basis for measuring efficiency - integrated with actual accounting systems

Answer 113

``` sales variable cost: -material -labour -variable overhead fixed overhead ```

Answer 114

difference between: - actual and standard sales prices - budgeted and actual sales volumes (measured in profit/contribution/revenue)

Answer 115

effect on profit of a 'change in revenue caused by the actual selling prices differing from the budgeted'

Answer 116

standard selling price x actual number of units sold actual selling price x actual number of units sold =>(actual - standard) x actual units sold -favourable if above 0

Answer 117

measured the effect on contribution/profit of not achieving the budgeted volume of sales -difference between actual and budgeted sales volume valued at either standard profit (ABD) or standard contribution (marginal)

Answer 118

actual sales volume - budgeted sales volume | -favourable is positive

Answer 119

standard profit per unit (absorption costing) standard contribution per unit ( marginal costing) standard revenue per unit (rarely used)

Answer 120

(actual sales volume - budgeted sales volume) x standard contribution p.u -favourable is positive

Answer 121

(actual sales volume - budgeted sales volume) x standard profit p.u -favourable is positive

Answer 122

(actual sales volume - budgeted sales volume) x selling price -favourable is positive

Answer 123

1) larger discounts offered to persuade bulk buying 2) lower discounts due to strength of demand 3) effect of low-price offers due to marketing campaign 4) market conditions forcing industry wide price change

Answer 124

1) successful/unsuccessful direct selling efforts 2) successful/unsuccessful marketing efforts 3) unexpected changed in customer needs/buying habits 4) failure to satisfy demand due to production difficulties 5) Higher demand due to a cut in selling prices, or lower demand due to an increase in sales prices

Answer 125

DM total variance split into: DM price variance: paying more/less for materials DM material usage variance:using more of less for actual output

Answer 126

difference between - standard DM cost of the actual production - actual direct material cost

Answer 127

actual production output x (actual - standard cost) F if negative - sum of DMPV and DMUV

Answer 128

difference between - actual price of purchased material - their standard cost

Answer 129

measures efficiency in the use of material, by comparing standard material usage for actual production with actual material used, the difference is values at standard cost

Answer 130

difference between: (standard purchase price per kg or per time (per litre for liquids) -actual purchase price) x actual quantity used

Answer 131

a) using quantity of materials purchased (eliminated variances) b) using quantity used (variance eliminated as item is used and remaining inv is closing)

Answer 132

(standard quantity for actual production - actual quantity used) x standard purchase price

Answer 133

1) using a different supplier who is cheaper/more expensive 2) bulk buying or buying smaller quantity, losing discount 3) unexpected increase in prices charged by supplier 4) efficient/inefficient buying procedures 5) unexpected buying costs, such as high delivery charged 6) a change in material quality, resulting in either higher or lower purchase prices

Answer 134

1) a higher than/lower than expected rate of scrap or waste 2) using a difference quality or material affecting wastage 3) defective materials 4) better quality control 5) more efficient work procedures, resulting in better material usage rates 6) changing the labour mix which impacts on wastage of different types of labour make more/less errors 7) changing the materials mix to obtain a more expensive/less expensive mix than the standard

Answer 135

DL total variance split into - DL labour rate variance - DL efficiency variance Idle time variance

Answer 136

difference between: standard DL cost of actual production actual cost of DL

Answer 137

actual quantity of output x (standard - actual cost) | => F if positive

Answer 138

paying more or less than expected per hr

Answer 139

using less or more hours p.u than expected

Answer 140

actual hours paid for x (standard - actual rate p.hr) | => F if positive

Answer 141

standard hourly rate x (standard hours for actual prod - actual hrs worked) => F if positive

Answer 142

1) an unexpected increase in basic rates of pay 2) payments of bonuses, where these are recorded as direct labour costs 3) using labour that is more or less experienced (and so more or less expensive) than the 'standard' 4) a change in the composition of the work force, and so a change in average rates of pay

Answer 143

1) taking more or less time than expected to complete work, due to inefficient or efficient working 2) using labour that is more or less experienced than the 'standard' 3) a change in the composition or mix of the work force, and so a change in the level of efficiency 4) improved working methods 5) industrial action by the work force : 'working to rule' 6) poor supervision 7) improvements in efficiency due to an unexpected 'learning effect' amongst the work force 8) unexpected lost time due to production bottlenecks and resource shortages

Answer 144

labour hours is used as VP OHs normally vary with them

Answer 145

(standard -actual cost) x actual quantity of output | =>positive means F

Answer 146

variable production overhead expenditure variance: paying more or less per hour for V OH variable production overhead efficiency variance:using more or less variable overheads per unit than expected

Answer 147

measures the difference between the variable overhead that should be used for actual output and variable production overhead actually used

Answer 148

(standard cost - actual cost) x number of hours worked

Answer 149

[(standard hours - actual hours) x actual output produced] | x standard variable OH rate

Answer 150

yes, as it is assumed that variable production OH is incurred during active hours only

Answer 151

difference between standard fixed production oH cost absorbed by actual production and actual fixed production overhead incurred

Answer 152

overheads absorbed as actual output | less actual fixed overhead incurred

Answer 153

under-adverse | over-favourable

Answer 154

difference between the overheads incurred and the overheads absorbed

Answer 155

the OAR is based upon two predictions - budgeted fixed overhead and the budgeted level of activity -if either is wrong, there will be over/under absorption and a fixed overhead total variance

Answer 156

budgeted fixed OH - actual fixed production overhead incurred

Answer 157

(actual - budgeted output) x standard fixed overhead rate per unit

Answer 158

marginal costing

Answer 159

whether more or fewer hours than budgeted are worked: | actual hours x FOAR per hour - budgeted expenditure

Answer 160

whether more or less time than standard was used to produce output: standard hours for actual production x FOAR per hour less actual hours x FOAR per hour

Answer 161

in marginal costing fixed production overheads are not absorbed into the cost of production

Answer 162

expenditure variance | -difference between actual and budgeted fixed production overhead expenditure

Answer 163

1) fixed overhead expenditure adverse variances are caused by SPENDING in excess of the budget 2) fixed overhead volume variance (therefore capacity and efficiency variance) is caused by changes in PRODUCTION VOLUME (which might be caused by changed in sales volumes or change in productivity)

Answer 164

3) variable production overhead expenditure variance are often caused by changes in MACHINE RUNNING COSTS 4) variable production overhead efficiency variances affected by similar issued to those for DIRECT LABOUR EFFICIENCY VARIANCES

Answer 165

if explanation for one variance also explains another | -might need to look at several variances together

Answer 166

- cheaper materials > favourable material price variance but might increase wastage and decrease labour productivity - more experienced labour might decrease labour rate variance but improve labour rate efficiency - changing composition of team might result in cheaper labour mix but worse productivity - workers trying to improve productivity to win bonus might use materials wastefully to save time - cutting sales prices might result in higher sales demand from customers

Answer 167

top level variance report, reconciling budgeted to actual profit -starts with expected figure and ends with actual

Answer 168

as soon as possible at end of each control period - top level reconciliation for senior management - variance reports for managers

Answer 169

overhead variances | -assumed that overheads are essentially variable

Answer 170

when an organisation wants to determine impact of multiple related products on profits -split of sales volume variance

Answer 171

Step 1. the standard mix Step 2. valuation Step 3. sales quantity variance

Answer 172

what actual sales for each product would have been if the sales proportions remained unchanged -compare to actual mix

Answer 173

int individual units method | the weighted average contribution method

Answer 174

each product's variance x standard margin(standard contribution per unit/standard profit per unit)

Answer 175

impact of changes on profit, by product - shows how customers switch from one to another - if favourable, can replicate change - if adverse, can look to counteract or switch

Answer 176

- calculate weighted average contribution (total contribution/total budgeted units) - deduct weighted average contribution from contribution per unit in each product

Answer 177

weighted average method: - easier to see impact of each individual product when measured against average price - better variances for control purposes

Answer 178

ignore: change in mix considers: impact of profit from selling more or less units than was bidgeted

Answer 179

in total using the weighted average contribution: - calculate weighted average contribution - multiply by (actual - budgeted sales)

Answer 180

by product | -each variance (between standard mix units and budgeted units ) multiplied by contribution

Answer 181

by product using the individual units contribution -shows impact on profits for the change in volume of each type of product (assuming mix between products had remained unchanged)

Answer 182

- sales mix variance can allow identification of trends in sales of individual elements of its total product sales - sales quantity variance can be used to show changes in the size of the market/change in the market share for an organisation - sales mix variance may indicate future directions for sales strategies-organisation would aim to repeat F variances by identifying their causes - sales mix variance can be used to gauge the success or failure of new sales campaigns - when sales volume is split between mix and quantity, can see who is responsible for different elements. Sales quantity variance indicates whether the sales team has performed well and mix variance will provide information on success of those responsible for applying the mix of sales

Answer 183

- like any variance, must consider controllability of the variance before making performance review decisions based on the output. Also need to consider effects of any changes in strategy e.g targeting - variance should be considered as a whole rather than individual basis due to interdependence e,g effect of production on sales volume variances - sales mix variance only relevant if products have some sort of relationship between them e.g complementary, different versions, substitutes - can be hard to apply these techniques in organisation with broad product ranges. Hard to determine which products are complementary, substitutes etc and often computer based techniques are needed to perform the detailed calculations

Answer 184

part of the total variance caused by an inappropriate original (ex-ante) standard -errors in setting original standard

Answer 185

part of the variance attributable to decisions taken within the business that has caused a change between the revised (ex-ante) standard and the actual results -operating performance

Answer 186

before event | -what forecasts are usually based on

Answer 187

after the event | -setting standards in hindsight

Answer 188

planning: uncontrollable operational: controllable

Answer 189

operational factors: materials price/usage variances, labour rate and efficiency variances, variable OH expenditure and efficiency variances, fixed OH expenditure variances and sales variances

Answer 190

revised budget vs actuals

Answer 191

budget vs revised budget

Answer 192

to see what is operational and what is planning related (uncontrollable) thereby giving a measure of operational efficiency

Answer 193

faulty standard-setting | -responsibility for this lies with senior rather than operational management

Answer 194

- change in one of the main materials used to make a product/service - unexpected increase in the price of materials due to a rapid increase in world market prices e.g oil price - a change in working methods and procedures that alters the expected direct labour time or a product/service - an unexpected change in the rate of pay to the work force

Answer 195

- operational variance are calculated against most up-to-date revision - total planning variance will be the difference between the original standard or budget and the most up-to-date revision. can be further divided between each individual planning error

Answer 196

- more useful - up-to-date - better for motivation - assesses planning

Answer 197

- subjective - time consuming - can be manipulated - can cause conflict

Answer 198

rearrange standard cost data and variances | -pull together standard cost per unit

Answer 199

total of all direct costs

Answer 200

When direct labour is a fixed cost, not variable

Answer 201

yes unless there is an allowance | e.g managers allow for seasonal variance in demand

A. Cost Accounting for decision and control Flashcards

(227 cards)