chapter 11- Standard costs and balanced Flashcards
OH rate
budgeted OH costs / expected standard activity index
Variance
is the difference between total actual costs and total standard costs.
unfavorable variance
Actual costs > standard costs
Favorable variance
Actual costs < standard costs
materials variances
Factors that affect the price paid for raw materials
materials price variances affected by:
- ability of quantity and cash discounts
- quality of materials requested
- delivery method used
materials quantity variance cause
is the variance is due to inexperienced workers, faulty machinery or careless ness the production department is responsible
causes of Labor price variance
- paying workers different wages than expected
2. misallocation of workers
causes Labor quantity variances
1.relates to efficiency of workers
Value chain
- research and development.
- acquisition of raw materials
- production
- sales and marketing
- delivery
- customer relations
Just in time inventory
inventory system in which goods are manufactured or purchased just in time for sale
Total quality management
reduce defects in finished products wit the goal of zero defects
Activity based costing
- allocate overhead based on use of activities
- results in more accurate product costing
theory of constraints
- limits the company’s potential profitability
- a specific approach to identify and manage these constraints in order to achieve company’s goals
Enterprise Resource Planning
software programs design to manage all major business process
corporate social responsability
considers a company’s efforts to employ sustainable business practices with regard to its employees society and environment
triple bottom line
it evaluates a company’s performance with regard to people , planet and profit
balanced score card
incorporates financial and non-financial measures in an integrated system that links performance measurement and company’s strategic goals
balance score card evaluation performance
financial –> customer –>internal process –> learning and growth
customer objective
- percentage of customers who would recommend product
- customer retention
- response time per customer request
- brand recognition
- customer service expense per customer
internal process
- % of defect free products
- stockouts
- labor utilization rates
- waste reduction planning accuracy
learning and growth
- %of employees leaving in less that one year
- number of cross trained employees
- ethics violations
- training hrs.
- reportable accidents
financial perspective
is the most common approach to performance evaluation
