BEC 17 Flashcards
What is an efficiency variance
This si designed to measure the extra cost or savings associated with being efficient in the manufacturing process
compare standard hours to actual hours
What is the variable overhead efficiency formula
(actual hours * standard variable overhead hourly rate) - (Standard hours * standard variable overhead efficiency variance)
What is overhead volume variance and what does it measure
Volume OH variance measures the
efficiency of spreading a fixed amount of overhead over more units due to higher production volume than had been budgeted
the INEFFICIENCY of charging that fixed amount of overhead to fewer units than were budgeted
Does a production manager have a lot of control over:
material usage
overhead efficiency
labor efficiency
overhead volume
yes - material usage
yes - labor efficiency
yes - overhead efficiency
no - overhead volume - this is because its a function of fixed overhead and volume of production they do not a have any control over that
What is material usage variance
material usage variance measures the efficiency in the manufacturing process - influenced by production manager
What is labor efficiency variance
- This measures the efficiency in the manufacturing process
What is overhead efficiency variance
This measures the efficiency in the manufacturing process
Can you use a standard cost system for either a job order costing system or process costing system?
You can use it for either
What is an example of job costing
these are large or unique items - jewelry or a batch of custom t-shirts - one job
What is an example of process costing
This is when you assign costs to mass produced items - lego sets
use cost per equivalent units
This is the number of units that could have been produced
multiple nominal units by % complete to get equivalent units
What is a standard cost system
This is when you estimate the required costs of a production
When would an overtime premium be charged to a specific job
When the customer required an early completion of the job
What are the rules for assigning overtime premium to a job in an job order costing system and when is it allocated to all jobs?
When an overtime premium is incurred because of the specific requirements of a particular job, it will be charged to that job in a job order costing system.
Whether it is the result of an increase in the overall level of activity, or due to an action of management, it will be part of manufacturing overhead and allocated to all jobs.
what is the difference between standard hours at a standard wage rate and actual hours at a standard wage rate called
labor usage variance
When you have ending WIP that is 50% complete what amount of conversion costs are included in the computation for equivalent production
use the 50%
ending WIP * 50% = EQ units included in ending inventory
What is a disadvantage of using a process costing system vs job processing
process costing uses equiv units - which require calculations which make it more cumbersome than job costing
Partial shipment are not disadvantaged compared to jobs costing - because the goods are very homogeneous
Process costing usually requires less work because costs are tracked at the department rather than the job level
process costing charges material and labor expenses to departments - not specific jobs
job - order costing requires that materials and expenses be charged accurately to each specific job
Under the 2 variance method - the controllable variance is the difference between actual overhead incurred and budgeted overhead based on actual volume produced
Controllable (budgeted) variance therefore has both variable plus fixed overhead elements
volume variance includes fixed overhead only
How do you treat normal spoilage and slap costs
these are both normal and expected and therefore are included in the cost of units produced
under the FIFO method - of process costing considers what
current period costs only
where do you record factory overhead applied in a process cost system
work in process inventory control
What are joint products
This is when you have multiple products (joint products) that result from the same process
The costs incurred in that process are called joint costs
These costs are allocated to the various products based on how much it is worth, sales value, at the point as which the joint product are separated.
The net sales value at spilt off is the sales price of the individual item minus costs to complete after the split off
