Chapter 10 Flashcards
Quantity standards
specify how much of an input should be used to make a product or provide a service.
Price standards
specify how much should be paid for each unit of the input.
Standard Quantity Per Unit
input you need to make a unit including allowances for normal waste, spoilage, rejects, and other normal inefficiencies.
Standard Price Per Unit
Price Paid for Unit
Direct Labor Rate Per Unit
The amount of money that must be paid to a worker for producing one unit
Direct Hours Per unit
the amount of man hours needed for a unit to be produced
Activity Variance
Flexible budget column-planning budget column
Price Variance
(Actual Price-Standard Price) * Quantity of Input
Quantity Variance
(Inputs actual use - amount inputs should have been used) * actual price of unit
price variance for materials?
Material price variance
price variance for labor?
labor rate variance
price variance for manufactoring overhead
variable overhead rate
Standard Quantity Allowed
actual number of units produced * the standard quantity per unit.
The amount of an input that should have been used to complete the period’s actual output
Standard Hours Allowed
The time that should have been taken to complete the period’s output.
actual number of units produced *the standard hours per unit
Spending Variance
total cost in column (1)- total cost in column (3).
The quantity variance
total cost in column (2) -the total cost in column (3).
Positive numbers in variance are a
U unfavorable
negative numbers in variance are a
F favorable
What does an unfavorable price show
indicates that the actual price (AP) per unit of the input was greater than the standard price (SP) per unit.
What does a favorable price variance show?
A favorable price variance indicates that the actual price (AP) of the input was less than the standard price per unit (SP).
What does an unfavorable quantity variance show?
indicates that the actual quantity (AQ) of the input used was greater than the standard quantity allowed (SQ).
What does a favorable quantity variance show?
indicates that the actual quantity (AQ) of the input used was less than the standard quantity allowed (SQ).
Direct Materials Column 1
Actual Quantity of Input at Actual Price (AQ*AP)
Direct Materials Column 2
Actual Quantity of Input at Standard Price (AQ*SP)
Direct Materials Column 3
Standard Quantity allowed for actual output at standard price (SQ*SP)
Direct Materials Column 1 - Direct Materials Column 2
Material Price Variance
Direct Materials Column 2 -Direct Materials Column 3
Material Quantity Variance
Direct Materials Column 1 - Direct Materials Column 3
Spending Variance
Column 1 Labor
Actual Hours of Input at Actual Rate (AH*AR)
Column 2 Labor
Actual Hours of Input at Standard Rate (AH*SR)
Column 3 Labor
Standard Hours Allowed for Actual Input at Standard Rate (SH*SR)
Labor Column 1 - Labor Column 2
Labor Rate Variance
Labor Column 2 - Labor Column 3
Labor Efficiency Variance
Labor Column 1- Labor Column 3
Spending Variance
Overhead Column 1
Actual Hours of Input at Actual Rate (AH*AR)
Overhead Column 2
Actual Hours of Input at Standard Rate (AH * SR)
Overhead Column 3
Standard Hours allowed for Actual Input at Standard RatE (SH * SR)
Overhead Column 1- Overhead Column 2
Variable Overhead Rate Variance
Overhead Column 3 - Overhead Column 2
Variable Overhead Efficiency Variance
Overhead Column 1 - Overhead Column 3
Spending Variance
Overhead deals with
Hours and Rates
Labor Deals with
Hours and Rates
Direct Materials Deals with
Quantity and Price
