Lecture 8 - Cost Variances

Lecture 8 - Cost Variances - Direct Cost Variance Analysis...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Direct Cost Variance Analysis Chapter 7 Takeaways By the end of this session, you should understand: How variance analysis can be used to help manage a business. How to calculate direct cost variances. How to interpret direct cost variances. Why is this topic important? • Variance Analysis is a common tool for reconciling actual performance to planned performance. • Variance Analysis can reveal that what you thought was going on. . . wasn’t really.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Why do Variance Analysis? • To (begin to) understand why results are different from: - what we expected. . . - last period . . . - our goal. . . Static vs. Flexible Budgets Static Budget – How much should we have spent, given our planned level of production (or other activity)? Flexible Budget – How much should we have spent, given our actual level of production (or other activity)? What is a standard? • A “standard” is a carefully pre-determined price, cost, or quantity amount. – Generally expressed on a pure-unit basis.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 05/19/2008 for the course ACCT 2521 taught by Professor Basu during the Fall '07 term at Temple.

Page1 / 6

Lecture 8 - Cost Variances - Direct Cost Variance Analysis...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online