Ch 4, Module 7 Flashcards
standard costing system
most common cost measurement systems
measure the costs the firm expects that it SHOULD incur during production
types of variance
favorable
unfavorable
uncontrollable
DM price variance computation
actual quantity purchased x (actual price - standard price)
DM quantity usage variance
standard price (actual quantity used - standard quantity allowed)
*note - cannot net against DM price variance
DL rate variance computation
= actual hours worked (acutal rate - standard rate)
DL efficiency variance computation
standard rate x (actual hours worked - standard hours allowed)
*note - can net against DL rate variance
VOH rate (spending) variance
= actual hours x (actual rate - standard rate)
VOH efficiency variance
= standard rate x (actual hours - standard hours allowed for actual production volume)
FOH budget (spending) variance
= actual fixed OH - Bedgeted fixed OH
FOH volume variance
= budgeted fixed OH - standard fixed OH cost allocated to production
underapplied OH
when the amount of OH incurred in the period exceeds the amount applied
net debit balance (of expense)
unfavorable variance because the actual amount of OH is higher than expected
overapplied OH
when the actual amount of OH is less than the amount applied
net credit balance (of expense)
favorable variance because actual OH incurred is less than expected
sales price variance
= (actual selling price per unit - budgeted selling price per unit) x actual units sold
sales volume variance
=(actual units sold - budgeted sales units) x standard contribution margin per unit
