BEC 5 - Costing Accounting and Performance

Question 1

Variance Analysis

Answer 1

Manufacturing costs result in a variance costs of each

Ie: Standard – Actual = Difference

Question 2

DM Price Variance

Answer 2

AQ(SP-AP)

• Purchasing Dept

Question 3

DM Usage Variance

Answer 3

SP(SQ-AQ)

• Production Dept

Question 4

DL Rate Variance

Answer 4

AH(SR-AR)

• Personnel Dept

Question 5

DL Efficiency Variance

Answer 5

SR(SH-AH)

• Production Dept

Question 6

Standard Allowed for Actual Production Formula

Answer 6

SQ x SH

Question 7

What is the overhead variance that manufacturing has the least control over?

Answer 7

Overhead Production VOLUME variance

• measures whether the company produced as many units as expected
• when Actual Units produced > Anticipated Amount, the amount of OH APPLIED > Budgeted Amount
  = Favorable Variance

Question 8

Overhead Spending Variance (OSV) Formula

Answer 8

(AH*pVohr + Budgeted Fixed OH) – Actual OH

• positive = favorable

OR

Actual OH - FBE@actual (UNITS are constant, Variable and FC are different)

Question 9

Overhead Efficiency Variance (OEV) Formula

Answer 9

pVohr*(SH – AH)

• positive = favorable

Or

FBE@Actual - FBE@Standard (FC & VC are constant, Units are different)

Question 10

Overhead Production Volume Variance (OVV) Formula

Answer 10

(SH x pFohr) – Budgeted FIXED OH

Or

FBE@Standard - OH Applied (VC are constant, FIXED is different)

Question 11

Predetermined FIXED overhead rate (pFohr)

Answer 11

Budgeted FIXED overhead / SH based on expected production

Question 12

Budget Variance

Answer 12

Controllable but both FC and VC are different

• Actual OH – FBE@ Standard

Question 13

Job Order Costing

Answer 13

• expensive, heterogeneous production
• cost based per job
• cost center for each job

Question 14

Process Costing

Answer 14

• inexpensive, homogeneous production
• cost per period
• each processing dept. becomes a cost center
• equivalent whole units (WTD AVG or FIFO)

Question 15

WTD Average Equivalent Whole Units

Answer 15

EWU = Units Completed x (EWIP x Completion%)

Question 16

FIFO Equivalent Whole Units

Answer 16

EWU = (BWIP1-Completed%) + (Completed Units-BWIP) + (EWIPCompleted%)

Question 17

What are the methods of recognizing a by-product?

Answer 17

• relative sales value
• NRV
• When sold (ordinary income, other income, OR contra to COGS)