tf4 - Topic Focus Topic Focus 4 Standard Costing 4 Standard...

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Topic Focus 4 – Standard Costing Standard Costing Learning Objectives 1. Understand how a standard costing system is used to value inventory and control costs. 2. Calculate the fixed overhead volume variance. Summary of End of Chapter Material Difficulty: E = Easy, M = Moderate, D = Difficult Bloom: K = Knowledge, C = Comprehension, AP = Application, AN = Analysis, S = Synthesis, E = Evaluation AACSB : A = Analytic, C = Communication, E = Ethics AICPA FN: DM = Decision modeling, RA = Risk Analysis, M = Measurement, R = Reporting, RS = Research, T = Technology AICPA PC: C = Communication, I = Interaction, L = Leadership, P = Professional demeanor, PM = Project Management, PS = Problem Solving and Decision Making, T = Technology IMA: BA = Business applications, BP = Budget Preparation, CM = Cost Management, DA = Decision Analysis, PM = Performance Measurement, R = Reporting, SP = Strategic Planning Item L. O. Difficulty Level Minutes to Complete Bloom’s Taxonomy AACSB AICPA FN AICPA PC IMA Ethics Coverage GUIDED UNIT PREPARATIONS 1 1 E 5-7 K A M PS CM 2 1 E 2 K A M PS CM 3 1 E 2 K A M PS CM 4 2 E 3 K A M PS CM EXERCISES T4-1 1 M 8 AP A M PS CM T4-2 1 M 8 AP A M PS CM T4-3 1 M 4 AP A M PS CM T4-4 1 M 4 AP A M PS CM T4-5 1 M 12-15 AP A M PS CM T4-6 1 M 12 AP A M PS CM T4-7 1, 2 M 15 AP A M PS CM T4-8 2 M 12 AP A M PS CM PROBLEMS T4-9 1, 2 M 20-25 AP A M PS BP T4-10 2 D 20-25 AP, AN A M PS BP T4-11 1, 2 D 25-30 AP A M PS CM T4-1 Topic Focus 4 © aopsan/Shutterstock
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Solutions for Davis & Davis, Managerial Accounting , 2 nd ed. SOLUTIONS TO GUIDED UNIT PREPARATION 1. In a normal costing system, actual direct labor and actual direct materials costs are recorded in the inventory accounts. Overhead is applied to inventory using a predetermined overhead rate. Any under- or over-applied overhead is closed to cost of goods sold or is pro-rated to Work in Process Inventory, Finished Goods Inventory or Cost of Goods Sold. In a standard costing system, all inventory is recorded at standard cost while the products are being made. Differences between standard and actual costs are recorded in variance accounts. Direct materials price variances are recorded when materials are purchased, and all other variances are recorded at the end of the accounting period. 2. Unfavorable variances are recorded as debits since they increase expenses and reduce income relative to standard costs. 3. Variances are typically disposed of by closing them to cost of goods sold. 4. A fixed overhead volume variance occurs only when the actual volume of the application base differs from the budgeted volume that was used to calculate the predetermined overhead rate.
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