 Show CHAPTER 8 FLEXIBLE BUDGETS, OVERHEAD COST VARIANCES, AND MANAGEMENT CONTROL 8-1How do managers plan for variable overhead costs? Effective planning of variable overhead costs involves: 1.Planning to undertake only those variable overhead activities that add value for customers using the product or service, and 2.Planning to use the drivers of costs in those activities in the most efficient way. 8-2How does the planning of fixed overhead costs differ from the planning of variable overhead costs? At the start of an accounting period, a larger percentage of fixed overhead costs are locked-in than is the case with variable overhead costs. When planning fixed overhead costs, a company must choose the appropriate level of capacity or investment that will benefit the company over a long time. This is a strategic decision. 8-3How does standard costing differ from actual costing? The key differences are how direct costs are traced to a cost object and how indirect costs are allocated to a cost object: Actual CostingStandard Costing Direct costsActual prices × Actual inputs used Standard prices × Standard inputs allowed for actual output Indirect costsActual indirect rate × Actual inputs used Standard indirect cost-allocation rate × Standard quantity of cost-allocation base allowed for actual output 8-4What are the steps in developing a budgeted variable overhead cost-allocation rate? Steps in developing a budgeted variable-overhead cost rate are: 1.Choose the period to be used for the budget, 2.Select the cost-allocation bases to use in allocating variable overhead costs to the output produced, 3.Identify the variable overhead costs associated with each cost-allocation base, and 4.Compute the rate per unit of each cost-allocation base used to allocate variable overhead costs to output produced. 8-5What are the factors that affect the spending variance for variable manufacturing overhead? Two factors affecting the spending variance for variable manufacturing overhead are: a. Price changes of individual inputs (such as energy and indirect materials) included in variable overhead relative to budgeted prices. 8- How do you calculate standard cost variance?Below are some of the Variance Analysis formulae that one can apply: Material Cost Variance Formula = Standard Cost – Actual Cost = (SQ * SP) – (AQ * AP) Labor Variance Formula= Standard Wages – Actual Wages = (SH * SP) – (AH * AP)
What is a standard variance in accounting?A standard cost variance is the difference between a standard cost and an actual cost. This variance is used to monitor the costs incurred by a business, with management taking action when a material negative variance is incurred.
What is standard costing formula?Formula to calculate standard costs
Direct labour = employee hourly rate x no. of hours worked x total number of units. Materials cost = market price per unit x total number of units. Manufacturing overhead = fixed overhead + (variable manufacturing overhead x total number of units)
What is a standard cost in cost accounting?Definition of Standard Cost
A standard cost is described as a predetermined cost, an estimated future cost, an expected cost, a budgeted unit cost, a forecast cost, or as the "should be" cost. Standard costs are often an integral part of a manufacturer's annual profit plan and operating budgets.
|
Standard cost variance accounts begin and end each accounting period with a balance of
zusammenhängende Posts
Urheberrechte © © 2024 ihoctot Inc.
