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THE UNIVERSITY OF NEW SOUTH WALES
SCHOOL OF ACCOUNTING
ACCT2522 Management Accounting 1
Session 1, 2009
Tutorial Week 6 - Standard costing and variance analysis
Overall Theme
This week we look at a very useful “management accounting control” tool, namely, variance
analysis.
We explore how total variance can be broken down into more meaningful
components to allow better understanding of the reasons behind a discrepancy between the
actual and budgeted amounts.
Desired Learning Outcomes and Essential Reading
Langfield-Smith Chapter 10
After completing this topic, you should be able to:
1.
Explain how standard costing can be used to help control and manage resources;
2.
Describe and understand how to set standards;
3.
Understand how participation in standard setting, and the choice between perfection
and practical standards, can impact on behaviour;
4.
Develop standard costs for direct material and direct labour;
5.
Calculate and interpret Direct Material and Direct Labour variances;
6.
Understand how to determine the causes of variances, and when to take corrective
actions; and
7.
Describe some behavioural effects of standard costing systems.
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