Standard Costing - Overheads and Sales Flashcards
What are variable overheads?
Indirect costs which vary in proportion to the volume of production or other output.
What does variable overhead expenditure variance measure?
It measures how much of the variable overhead the standard hourly rate variance is caused by the hourly cost differing from the standard hourly rate.
What does variable overhead efficiency variance measure?
It measures how much of the variable overhead variance is caused by the amount of hours (labour or machine) used differing from standard.
What are fixed overheads?
Indirect costs which do not vary in proportion to the volume of production or other output.
What is marginal costing?
A technique that values cost units based on variable costs only. Fixed costs are considered to relate only to the reporting period of time.
What is fixed overhead expenditure variance in marginal costing?
The only fixed overhead variance generated using marginal costing. It measures the difference between the budgeted expenditure and the actual expenditure on fixed overheads in a reporting period.
What is absorption costing?
A technique that values cost units based on a suitable part of all the costs of production, whether fixed or variable in behaviour.
What is an absorption base?
The mechanism by which absorption costing absorbs indirect costs into cost units. It may be simply per cost unit, or (for example) per standard labour or machine hour.
What is total fixed overhead variance in absorption costing?
The difference between the actual expenditure on fixed overheads, and the amount of fixed overhead absorbed by the actual output. The expenditure and volume variances will combine in this total variance.
What is fixed overhead expenditure variance in absorption costing?
The difference between the budgeted expenditure and the actual expenditure on fixed overheads in a reporting period.
What is fixed overhead volume variance in absorption costing?
The difference between the fixed overhead which would have been absorbed by the budgeted output and the fixed overhead which was absorbed by the actual output.
What is sales price variance?
The difference in profit caused by selling goods at a different price from standard.
What is sales volume variance?
The difference in profit caused by selling a different volume of goods than budgeted.
What is total sales variance?
The total of the sales price variance and the sales volume variance.
