Cost Exam 3 (Ch. 8-10) Flashcards
Labor Efficiency Variance Formula
SR (AH - (SH * Activity))
Labor Rate Variance Formula
AH (AR-SR)
Materials Quantity Variance Formula
SP (AQU - (SQ * Activity))
Materials Price Variance Formula
AQP (AP-SP)
Variable Overhead Efficiency Variance Formula
SR (AH - (SH * Activity))
Variable Overhead Rate Variance Formula
AH (AR - SR)
Static Planning Budget Formula
Fixed + (Variable * Budgeted Quantity)
Flexible Budget Formula
Fixed + (Variable * Actual Quantity)
Activity Variance Formula
Flexible Budget - Static Planning Budget
Revenue & Spending Variance Formula
Actual Spending - Flexible Budget
What are the 2 purposes of budgeting?
Planning, Controlling
What is responsibility accounting?
When managers are held responsible for the items they can control.
What is a continuous or perpetual budget?
One in which another month is added to the end as one month ends.
What are 3 advantages of a self-imposed budget?
Accurate, reliable, motivating
What is the disadvantage of a self-imposed budget?
Budgetary slack
A sales budget is constructed by multiplying __ ___ ___ by the ___ ___.
budgeted unit sales
selling price
What does the sales budget determine?
How many units need to be produced
What 3 budgets make up the production budget?
Direct materials budget
Direct labor budget
Manufacturing overhead budget
What are the 4 sections of a cash budget?
Receipts
Disbursements
Excess/Deficiency
Financing
An estimate of what revenues and costs should have been, given the actual level of activity, is called a ___ ____.
Flexible budget
The level of input that should be used to make a product or provide a service is called a ____ ____.
Quantity standard
What is a standard?
A benchmark that measures performance
What is the difference between an ideal standard and a practical standard?
An ideal standard is only attainable under the best circumstances. A practical standard is tight, but attainable.
The amount that should be paid for each unit of input (material, labor, factory overhead) is a ____ ___.
Price standard
or cost standard
Standard Direct Materials Cost Formula
Standard price x Standard quantity
Standard Direct Labor Cost Formula
Standard rate x Standard hours
The ___ __ _____ distinguishes between allowed cost, normal variance, and extraordinary variance.
Principle of Exception
The __ __ _____ identifies causes of variances.
Principle of Exception
The __ __ ____ focuses on areas where actual results deviate from expected results.
Principle of Exception
Unfavorable variances are debits/credits.
debits
Favorable variances are debits/credits.
credits
Writing off an unfavorable variance increases/decreases operating income.
decreases
Writing off a favorable variance increases/decreases operating income.
increases
For a favorable variance, which of the following are debits and which are credits?
Work in Process
Materials Quantity Variance
Raw Materials
WIP - Debit
MQV - Credit
Raw Materials - Credit
For an unfavorable variance, which of the following are debits and which are credits?
Work in Process
Materials Quantity Variance
Raw Materials
WIP - Debit
MQV - Debit
Raw Materials - Credit
For fixed manufacturing overhead, what is the formula for a budget variance?
Actual fixed overhead - budgeted fixed overhead
For fixed manufacturing overhead, what is the formula for a volume variance?
Budgeted fixed overhead - fixed overhead applied to work in process
