CHAPTER_10_-_Review_Sheet_1 - CHAPTER10ReviewSheet

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CHAPTER 10 – Review Sheet STANDARD COSTING, OPERATIONAL PERFORMANCE MEASURES,  AND THE BALANCED SCORECARD Learning Objectives 1. Explain how standard costing is used to help manage costs. 2. Describe two ways to set standards, and distinguish between perfection and practical  standards. 3. Compute and interpret the direct-material price and quantity variances and the direct- labor rate and efficiency variances. 4. Explain several methods for determining the significance of cost variances. 5. Describe some behavioral effects of standard costing. 6. Explain how standard costs are used in product costing. 7. Summarize some advantages of standard costing. 8. Explain several common criticisms of standard costing. 9. Describe the operational performance measures appropriate for today's manufacturing  environment. 10. Describe the balanced scorecard concept and explain the reasoning behind it. 11. Prepare journal entries to record and close out cost variances (appendix).
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Chapter Overview I. Managing Costs  A. System components B. Management by exception  II. Setting Standards  A. Analysis of historical data B. Task analysis C. Participation in setting standards D. Perfection versus practical standards E. Applications in nonmanufacturing organizations III. Variance Analysis A. Direct-material and direct-labor standards B. Variance model C. Direct-material and direct-labor variances IV. Variance Investigation V. Behavioral Impact of Standard Costing  VI. Controllability of Variances  A. Variance interaction and trade-offs VII. Standard Costs and Product Costing  VIII. Advantages of Standard Costs IX. Criticisms of Standard-Costing Systems in Today's Manufacturing Environment  X. Operational Control Measures XI. Balanced Scorecards A. Financial and nonfinancial performance measures B. Lead and lag measures
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XII. Appendix: Journal Entries in a Standard-Costing System
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Key Lecture Concepts 1. MANAGING COSTS Standard-cost systems  are used to help managers control the cost of operations.  The system has three components:  standard costs  (i.e., predetermined costs),  actual costs, and the difference between the two figures (termed a  variance). A standard cost for each product cost category (materials, labor, and overhead) is  calculated on a per-unit basis.   This calculation considers the planned quantity of each input factor  allowed (pounds, hours, etc.) and the planned price for each input factor  (price per pound, rate per hour, etc.).  The total planned cost is a mini, per- unit budgeted amount.   After the actual costs are known, a report is generated that shows actual costs,  planned costs, and related variances.  A manager can examine the variance 
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CHAPTER_10_-_Review_Sheet_1 - CHAPTER10ReviewSheet

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