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Chapter 7-Study Information

Chapter 7-Study Information - (Exhibit 7-3 and label the...

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Accounting 230 Chapter 7--Study Information Horngren 13 th Ed. 1. You should be able to define the following terms: control function, variance analysis, management by exception, static budget, flexible budget, standard, ideal standards, practical standards, price variances, quantity variances, standard quantity (hours) allowed, standard cost system, and benchmarking. 2. You should be able to prepare a flexible budget at the end of a time period in order to calculate flexible-budget variances and sales-volume variances—Level 2 Analysis (Exhibit 7-2). 3. You should be able to discuss some of the uses of a standard cost system in the United States and other countries around the world. 4. You should be able to further break down the flexible-budget variance into a price and quantity variance. 5. You should be able to calculate direct material price and quantity variances
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Unformatted text preview: (Exhibit 7-3) and label the variances favorable or unfavorable. 6. You should be able to calculate direct labor rate and efficiency variances (Exhibit 7-3) and label the variances favorable or unfavorable. 7. You should be able to discuss several causes of the direct material and direct labor variances and who would be responsible for those variances (responsibility accounting). 8. You should be able to discuss management uses of variances—performance evaluation and organization learning. 9. You should be able to record the journal entries associated with direct material and direct labor variances. 10. You should be able to understand how activity-based costing information can be incorporated with variance analysis....
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