Chapter_8

# Chapter_8 - 100 Fixed 300 Total 400 380 Standard Costs @...

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Performance Evaluation

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Management of Earnings Change Price Change Volume Change Costs
Cost Standards: Expectations Standard Cost Actual Cost Variance = Standard Cost - Actual Cost If spend/use more than expected: unfavorable If spend/use less than expected: favorable If sell less than expected: unfavorable If sell more than expected: favorable Good variance analysis creates good hypotheses that managers can test Reasonable hypotheses are consistent with the facts

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Effect of Volume and Cost Original Budget Flexible Budget Actual Cost Flex Budget Variances Sales Activity Variances Total Variance Volume 100 90 DM 200 297 DL 300 252 Overhead Variable

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Unformatted text preview: 100 Fixed 300 Total 400 380 Standard Costs @ 100 units Std Qty Std Price Std Cost DM 2 yds \$1.00/yd. \$2.00 DL .5 hrs \$6/hr \$3.00 VOH 1 unit \$1.00 FOH 1 unit \$3.00 \$4.00 Total \$9.00 Actual Costs Actual Quantity Actual Cost DM 2.2 yds/unit = 198 yds \$1.50/yd DL .4 hrs/unit = 36 hours \$7.00/hr Direct Material Variances Usage = (SQ - AQ) x SP (180 - 198) x \$1 = 18U Price = (SP - AP) x AQ (\$1 - \$1.50) x 198 = 99U Total Material Variance = 117U Direct Labor Variances Efficiency = (SQ - AQ) x SP (45 - 36) x \$6 = 54F Rate = (SP - AP) x AQ (\$6 - \$7) x 36 = 36U Total Labor Variance = 18F...
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## This note was uploaded on 04/22/2008 for the course ACC 301 taught by Professor Bruns during the Fall '08 term at Northeastern.

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Chapter_8 - 100 Fixed 300 Total 400 380 Standard Costs @...

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