Chapter 10 Full Student Version

Chapter 10 Full Student Version - 10-1 MANAGERIAL...

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10-1 MANAGERIAL ACCOUNTING RSM222 Standard Costs and Overhead Analysis Chapter 10
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10-2 Standard Costs STANDARD COST - A budgeted or estimated cost to manufacture a single unit of product or perform a single service. STANDARD COSTING SYSTEM – A product costing method using unit norms for production costs. It is the cost the firm should incur for the operation.
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10-3 Standard Costs Standards are benchmarks or “norms” for measuring performance. Two types of standards are commonly used. Quantity standards specify how much of an input should be used to make a product or provide a service. Cost (price) standards specify how much should be paid for each unit of the input. LO 1
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10-4 Standard Costs Direct Material Deviations from standards deemed significant are brought to the attention of management, a practice known as management by exception . Type of Product Cost Amount Direct Labour Manufacturing Overhead Standard LO 1
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10-5 Variance Analysis Cycle Prepare standard cost performance report Analyze variances Begin Identify questions Receive explanations Take corrective actions Conduct next period’s operations Exhibit 10-1 LO 1
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10-6 Standard Cost Card – Variable Production Cost A standard cost card for one unit of product might look like this: A A × B Standard Standard Standard Quantity Price Cost Inputs or Hours or Rate per Unit Direct materials 3.0 lbs. 4.00 $ per lb. 12.00 $ Direct labour 2.5 hours 14.00 per hour 35.00 Variable mfg. overhead 2.5 hours 3.00 per hour 7.50 Total standard unit cost 54.50 $ B LO 1
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10-7 Price Variance Quantity Variance A ctual Q uantity A ctual Q uantity S tandard Q uantity × × × A ctual P rice S tandard P rice S tandard P rice A General Model for Variance Analysis LO 1 Spending Variance (AQ × AP) – (AQ × SP) (AQ × SP) – (SQ × SP) AQ = A ctual Q uantity SP = S tandard P rice AP = A ctual P rice SQ = S tandard Q uantity
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10-8 Price Variance Quantity Variance Actual Quantity Actual Quantity Standard Quantity × × × Actual Price Standard Price Standard Price A General Model for Variance Analysis LO 1 Spending Variance Standard quantity is the standard quantity allowed for the actual output of the period.
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10-9 Price Variance Quantity Variance Actual Quantity Actual Quantity Standard Quantity × × × Actual Price Standard Price Standard Price A General Model for Variance Analysis LO 1 Spending Variance Standard price is the amount that should have been paid for the input used.
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10-10 Glacier Peak Outfitters has the following direct material standard for the fibrefill in its mountain parka. 0.1 kg. of fibrefill per parka at $5.00 per kg. Last month 210 kgs of fibrefill were purchased and used to make 2,000 parkas. The material cost a total of $1,029. Material Variances Example LO 2
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10-11 210 kgs. 210 kgs. 200 kgs. × × × $4.90 per kg. $5.00 per kg. $5.00 per kg.
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This note was uploaded on 04/03/2012 for the course RSM 222 taught by Professor D.cianflone during the Spring '10 term at University of Toronto.

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Chapter 10 Full Student Version - 10-1 MANAGERIAL...

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