Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Managerial Accounting > Standard_Costs_and_Variances_Flashcards > Flashcards

Standard_Costs_and_Variances_Flashcards

1
Q

What is the purpose of standard costs?

A

To aid planning, control, and performance evaluation by establishing cost benchmarks.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are standard costs?

A

Expected costs for materials, labor, and overhead under normal conditions.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are the types of standards?

A
  1. Ideal standards (perfect efficiency) and 2. Practical standards (realistic with allowances).
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What are the components of direct material standards?

A

Standard Price (SP) per unit and Standard Quantity (SQ) per unit.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the components of direct labor standards?

A

Standard Rate (SR) per hour and Standard Hours (SH) per unit.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is the formula for direct materials price variance (MPV)?

A

MPV = AQ (AP – SP).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is the formula for direct materials quantity variance (MQV)?

A

MQV = SP (AQ – SQ).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is the formula for direct labor rate variance (LRV)?

A

LRV = AH (AR – SR).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is the formula for direct labor efficiency variance (LEV)?

A

LEV = SR (AH – SH).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is the purpose of variance analysis?

A

To identify and explain differences between actual costs and standard costs.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is the formula for variable overhead spending variance (VOH SV)?

A

VOH SV = AH (AR – SR).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the formula for variable overhead efficiency variance (VOH EV)?

A

VOH EV = SR (AH – SH).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is fixed overhead variance?

A

Differences between actual and budgeted fixed costs, including spending and volume variances.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What are fixed overhead budget and volume variances?

A

Budget variance: Actual Fixed Overhead – Budgeted Fixed OH
Volume: Budgeted FOH – applied FOH.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are the two capacity measures?

A
  1. Theoretical capacity (max output) and 2. Practical capacity (accounts for downtime).
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What are the advantages of standard costs?

A

Improves cost control, decision-making, and resource allocation.

17
Q

What are the disadvantages of standard costs?

A

May lead to outdated benchmarks and focus on variances over quality.

18
Q

What is the significance of the balanced scorecard in variance analysis?

A

Provides a comprehensive evaluation, including financial and operational perspectives.

19
Q

What is the significance of setting practical standards?

A

Balances efficiency goals with achievable performance targets.

20
Q

What exam question can you expect related to variance analysis?

A

How do you calculate and interpret variances such as MPV and LRV?

21
Q

draw the price, quantity — price variance tree

A

check notes

22
Q

fixed portion of POHR formul

A

Fixed overhead rate = total budgeted fixed overhead cost / budgeted machine-hours

23
Q

budget variance formula

A

Actual fixed overhead cost - budget fixed overhad cost

24
Q

chapter 10 volume variance applied formula

A

POHR x (denominator - standard hours allowed)

25
Q

chapter 10 volume variance denominator hours formula

A

budgeted output units * budgeted direct manufacturing labor hours

26
Q

what does one of these mean variable overhead spending variance =AH(AR-SR)

A
  1. AH (Actual Hours): In the context of variable overhead, this represents the actual amount of activity used to apply overhead, often measured in labor hours or machine hours, depending on how overhead costs are allocated.
    1. AR (Actual Rate): This is the actual variable overhead cost rate per unit of the activity base (e.g., per labor hour or machine hour). It represents the actual rate at which variable overhead was incurred during production.
      SR (Standard Rate): This is the standard variable overhead cost rate per unit of the activity base. It reflects the budgeted or expected variable overhead rate per hour or machine hour used in planning and standard costing.
27
Q

what does one of these mean variable overhead efficiency variance =SR(AH-SH)

A
  1. SR (Standard Rate): This represents the standard variable overhead cost rate per unit of activity base, such as per machine hour or per labor hour. It reflects the planned or expected cost rate for variable overhead.
    1. AH (Actual Hours): The actual amount of activity (e.g., labor hours or machine hours) used during the period. This reflects how much of the activity base (e.g., hours) was actually consumed in the production process.
    2. SH (Standard Hours): The standard amount of activity (e.g., hours) that should have been used based on actual production output.
      a. It’s calculated as the expected hours per unit of output multiplied by the actual number of units produced. It indicates the efficient level of activity based on standards.
28
Q

standard quantity allowed (SQ)

A

=actual productionxstandard quantity per unit

29
Q

what does one of these mean Materials price Variance AQ(ap-sp)

A
  1. Actual Price (AP):
    a. This is the price that was actually paid per unit of material (e.g., per mL in this case).
    b. If the actual price is higher than the standard price, the variance will be unfavorable (extra cost),
    i. and if it’s lower, the variance will be favorable (cost savings).
    1. Standard Price (SP):
      a. This is the price that the company expected or planned to pay per unit of material.
      i. It’s set as a benchmark based on past prices, supplier contracts, or market research.
    2. Actual Quantity (AQ):
      a. This is the total amount of material actually purchased and/or used in production.
      b. The actual quantity is multiplied by the difference between the actual and standard prices to show the total impact of any price difference on overall cost.
30
Q

what does one of these mean Materials quantity Variance =SP(AQ-SQ)

A
  1. Actual Quantity Used (AQ):
    a. This is the total quantity of material actually used in production.
    b. If this value is higher than the standard quantity allowed, it indicates inefficiency or waste;
    i. if it’s lower, it shows efficiency.
    1. Standard Quantity Allowed (SQ):
      a. This is the quantity of material that should have been used for the actual output produced, based on the company’s standards.
      b. It’s calculated by multiplying the standard quantity per unit by the actual number of units produced.
    2. Standard Price (SP):
      This is the expected price per unit of material, used to evaluate the variance in terms of cost.
31
Q

what does one of these mean labor rate variance = AH (AR-SR)

A
  1. Actual Hours (AH):
    a. This is the total number of hours actually worked by the labor force during the period.
    1. Actual Rate (AR):
      a. This is the actual hourly wage rate paid to workers.
      b. If the actual rate is higher than the standard, it might mean that overtime or higher-wage workers were used;
      i. if it’s lower, it could mean savings on labor costs.
    2. Standard Rate (SR):
      a. This is the budgeted or planned hourly wage rate,
      i. often based on previous wages, expected wage agreements, or the market rate for labor.
32
Q

what does one of these mean labor efficiency variance = SR(AH-SH)

A
  1. Actual Hours (AH):
    a. This is the total number of hours actually worked by labor during the period.
    b. If the actual hours exceed the standard hours allowed, it might indicate inefficiencies or issues in the production process.
    1. Standard Hours Allowed (SH):
      a. This is the number of hours that should have been worked to produce the actual output, based on the company’s standards.
      b. It’s calculated by multiplying the standard hours per unit by the number of units produced.
    2. Standard Rate (SR):
      This is the planned or budgeted hourly wage rate, used to calculate the cost impact of any differences in hours worked
33
Q

applied MOH formula for chapter 10 variances

A

= POHR x activity measure allowed for the output

34
Q

what is the general direct labor variance

A

Direct labor rate variance + direct labor efficiency Variance

35
Q

predetermined overhead rate for the year. variable and fixed rates

A

you get this by using this formula (total variable or fixed cost)/denominator chosen for the year (machine hours or whatever) like the hours that they think should be for the period

36
Q

the flexible budget under variances chapter 10 how to get

A

is the fixed overhead cost applied to work in process.

formula
standard machine hours x fixed rate pohr

Managerial Accounting (9 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions