Upload
ralph-julius-parsons
View
224
Download
1
Tags:
Embed Size (px)
Citation preview
Use only with permission of Susan Crosson
Chapter 9 Chapter 9 Standard Costing and Standard Costing and
Variance AnalysisVariance Analysis
Fall 2007Crosson
Use only with permission of Susan Crosson
Learning Objectives:Responsibility Accounting & Cost CentersCost Performance Evaluation using Master and Flexible BudgetsStandard Costing Basics for Cost CentersPerformance Evaluation using Standard Costing: Spending and Efficiency VariancesCompute and Analyze DM,DL,VOH, and FOH variances
Use only with permission of Susan Crosson
Responsibility Accounting:Responsibility Accounting:
CCost Center:ost Center:
An information system that classifies An information system that classifies data according to a manager’s data according to a manager’s responsibilities for organizational responsibilities for organizational resourcesresources
Manager accountable for costs that have well-defined relationships between the center’s resources and products or services.
Use only with permission of Susan Crosson
Cost Performance Evaluation using Cost Performance Evaluation using Flexible and Master BudgetsFlexible and Master Budgets
ACTUALPRODUCTION
FLEXIBLE BUDGET
MASTER BUDGET
Actual Output
x Actual Quantity
x Actual Cost
Actual Output
x Standard Quantity
x Standard Cost
Estimated Outputx Standard Quantityx Standard Cost
Use only with permission of Susan Crosson
What Do You Know?What Do You Know?Flexible Budget PreparationFlexible Budget Preparation
Look and listen to SE5.
P2 parts 3 & 4
Use only with permission of Susan Crosson
P2 Cost Performance EvaluationP2 Cost Performance EvaluationACTUALPRODUCTIO
N(46,560)
APRIL FLEXIBLE BUDGET(46,560)
MASTER BUDGET (50,000)
DM $4,975DM $4,975
DL $5,850DL $5,850
IDL $1,290IDL $1,290
Supplies $ 960Supplies $ 960
VH&P $1,325VH&P $1,325
VO $2,340VO $2,340
FH&P $3,500FH&P $3,500
Depreciation $4,200Depreciation $4,200
I&T $1,200I&T $1,200
FO $1,600FO $1,600
Total $27,240Total $27,240
DM DM $.10$.10 x x 46,56046,560= $4,656.00= $4,656.00
DL DL $.12$.12 x x 46,56046,560= $5587.20= $5587.20
IDL IDL $.03$.03 x x 46,56046,560= $1396.80= $1396.80
Sup. Sup. $.02$.02 x x 46,56046,560= $931.20 = $931.20
VH&P VH&P $.03$.03 x x 46,56046,560= $1,396.80= $1,396.80
VO VO $.05$.05 x x 46,56046,560= $2,328.00 = $2,328.00
FH&P FH&P $3,500$3,500
Dep. Dep. $4,200$4,200
I&T I&T $1,200$1,200
FO FO $1,600$1,600
Total $26,796Total $26,796
DM $5,000DM $5,000
DL $ 6,000DL $ 6,000
IDL $1,500IDL $1,500
Sup. $1.000Sup. $1.000
VH&P $1,500VH&P $1,500
VO $2,500VO $2,500
FH&P $3,500FH&P $3,500
Dep. $4,200Dep. $4,200
I&T $1,200I&T $1,200
FO $1,600FO $1,600
Total $28,000Total $28,000
Use only with permission of Susan Crosson
Performance Evaluation using Performance Evaluation using Flexible and Master BudgetsFlexible and Master Budgets
ACTUALPRODUCTION
FLEXIBLE BUDGET
MASTER BUDGET
Actual Output
x Actual Quantity
x Actual Cost
Actual Output
x Standard Quantity
x Standard Cost
Estimated Outputx Standard Quantityx Standard Cost
Standard Costing
Use only with permission of Susan Crosson
Standard Costing Standard Costing Basics: Basics:
Master Budget Prepared for yearAs part of the Master Budget, Standard Quantities and Rates set for Materials, Labor, Variable Overhead and Fixed Overhead (i.e., predetermined rates—remember applied OH?During year Journal Entries use these StandardsManagers monitor Cost Centers by computing and analyzing Price and Quantity Variances for Materials, Labor and Variable Overhead and Budget and Volume Variances for Fixed Overhead
Use only with permission of Susan Crosson
Material, Labor, and Variable Material, Labor, and Variable Overhead VariancesOverhead Variances
ACTUALPRODUCTION
FLEXIBLE BUDGET
Actual Output
x Actual Quantity
x Actual Cost
Actual Quantity
x Standard Cost
Actual Output
x Standard Quantity
x Standard Cost
Spending or Spending or Price or Rate Price or Rate
VarianceVariance
Efficiency Efficiency or or
Quantity Quantity VarianceVariance
Use only with permission of Susan Crosson
Use the following information to answer questions: Use the following information to answer questions: The California Steel Works uses a standard costing The California Steel Works uses a standard costing system.system.
BUDGET:BUDGET: The variable standard cost of producing one case of steel brackets is:
Direct material (5 pounds @ $1 per pound) $ 5.00
Direct labor (2 hours @ $2 per hour) $ 4.00
Variable overhead (2 hours @ $3 per hour) $ 6.00
Thus, total variable cost per case $15.00.
The predetermined overhead rate is $7 per direct labor hour ($3 VOH and $2 FOH).
Based on a master budget of 20,000 cases.
ACTUAL:ACTUAL: During the past accounting period the company produced 25,000 cases and the actual cost per case were:
Direct material (5 pounds @ $.90 per pound $ 4.50
Direct labor ( 2 1/4 hours @ $1.80 per hour) $4.05
Variable overhead ($148,750/25,000 cases) $ 5.95
The actual fixed overhead was $105,250.
Use only with permission of Susan Crosson
Material, Labor, and Variable Overhead VariancesMaterial, Labor, and Variable Overhead Variances
ACTUAL PRODUCTION
25,000 cases (AAA)
ACTUAL Quantity AT STANDARD Cost (AAS)
FLEXIBLE BUDGET 25,000 cases (ASS)
DM: 25,000 x (5 pounds @ $.90 per
pound)= $112,500
DM: 25,000 x 5 x$1=
$125,000
DM: 25,000 x (5 pounds @ $1 per pound)=
$125,000
DL: 25,000 x( 2 1/4 hours @ $1.80 per
hour)= $101,250
DL: 25,000 x 2 1/4 x$2=
$112,500
DL: 25,000 x (2 hours @ $2 per hour)=
$100,000
VOH:
$148,750
VOH: 25,000 x 2 ¼ x$3=
$168,750
VOH: 25,000 x (2 hours @ $3 per hour)=
$150,000Spending Spending
or or Price or Price or
Rate Rate VarianceVariance
Efficiency or Efficiency or Quantity Quantity VarianceVariance
Use only with permission of Susan Crosson
Material, Labor, and Variable Material, Labor, and Variable Overhead VariancesOverhead Variances
ACTUALPRODUCTION
FLEXIBLE BUDGET
Actual Output
x Actual Quantity
x Actual Cost
Actual Quantity
x Standard Cost
Actual Output
x Standard Quantity
x Standard Cost
Favorable or Favorable or Unfavorable Unfavorable
Spending or Price or Spending or Price or Rate VarianceRate Variance
Favorable or Favorable or Unfavorable Unfavorable Efficiency or Efficiency or
Quantity VarianceQuantity Variance
Crosswalk to Variable Overhead Crosswalk to Variable Overhead AccountAccount
Variable OverheadVariable OverheadActual VOH:Actual Output
x Actual Quantity
x Actual Cost
Applied VOH:Actual Output
x Standard Quantity
x Standard Cost ((SAME AS FLEXIBLE BUDGET!!!)SAME AS FLEXIBLE BUDGET!!!)
Underappliedaka Net Spending & Efficiency Variances
Overappliedaka Net Spending & Efficiency Variances
Dr. COGS xxCr. OH xx
Dr. OH xxCr. COGS xx
Use only with permission of Susan Crosson
Fixed Overhead VariancesFixed Overhead Variances
ACTUALPRODUCTIO
N
MASTER or
FLEXIBLE BUDGET
APPLIED OVERHEAD
ActualActual
Fixed Fixed
OverheadOverhead
Budgeted Budgeted
Fixed Fixed
OverheadOverhead
Actual Output x
Fixed Overhead Rate*
* (Standard Quantity
x Standard Cost)Budget or Budget or Spending or Spending or ControllableControllable
VarianceVariance
Volume or Volume or UncontrollabUncontrollable Variancele Variance
Crosswalk to Fixed Overhead Crosswalk to Fixed Overhead AccountAccount
Fixed OverheadFixed OverheadActual FOH:
ActualActual
Fixed Fixed
OverheadOverhead
Applied FOH:Actual Output x Fixed Overhead
Rate*
* (Standard Quantity
x Standard Cost)
Underappliedaka Net Budget and Volume Variances
Overappliedaka Net Budget and Volume Variances
Dr. COGS xxCr. OH xx
Dr. OH xxCr. COGS xx
Use only with permission of Susan Crosson
Use the following information to answer questions: Use the following information to answer questions: The California Steel Works uses a standard costing The California Steel Works uses a standard costing system.system.
BUDGET:BUDGET: The variable standard cost of producing one case of steel brackets is:
Direct material (5 pounds @ $1 per pound) $ 5.00
Direct labor (2 hours @ $2 per hour) $ 4.00
Variable overhead (2 hours @ $3 per hour) $ 6.00
Thus, total variable cost per case $15.00
The predetermined overhead rate is $7 per direct labor hour ($3 VOH and $2 FOH).
Based on a master budget of 20,000 cases.
ACTUAL:ACTUAL: During the past accounting period the company produced 25,000 cases and the actual cost per case were:
Direct material (5 pounds @ $.90 per pound $ 4.50
Direct labor ( 2 1/4 hours @ $1.80 per hour) $4.05
Variable overhead ($148,750/25,000 cases) $ 5.95
The actual fixed overhead was $105,250.
Use only with permission of Susan Crosson
Fixed Overhead VariancesFixed Overhead VariancesACTUAL
PRODUCTION
BUDGET (MASTER or FLEXIBLE)
APPLIED OVERHEAD
$105,250 $80,000*$80,000*
*(20,000 cases x *(20,000 cases x $2/DLH x 2DLH)$2/DLH x 2DLH)
$100,000* $100,000*
** 25,000 cases x $4/case 25,000 cases x $4/case
or or 25,000 cases x 25,000 cases x
$2/DLH x 2DLH$2/DLH x 2DLHFavorable or UnfavorableFavorable or Unfavorable Budget or Spending or Budget or Spending or Controllable VarianceControllable Variance
Favorable or Favorable or UnfavorableUnfavorable Volume Volume
or Uncontrollable or Uncontrollable VarianceVariance
Use only with permission of Susan Crosson
What Do You Know?What Do You Know?Compute and Analyze Compute and Analyze
DM,DL,VOH, and FOH variancesDM,DL,VOH, and FOH variances
P4P4Look and listen SE6 , SE7, Look and listen SE6 , SE7, SE8.SE8.
Use only with permission of Susan Crosson
What Do You Know?What Do You Know?Variance AnalysisVariance Analysis
P3P7
Use only with permission of Susan Crosson
Homework Homework
P4P4