Cost accounting 11.txt

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Author:
isatonk
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146919
Filename:
Cost accounting 11.txt
Updated:
2012-04-10 23:43:21
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UNT cost accounting
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Description:
UNT cost accounting part 11 terms and concepts (p.583-603 and p.630-632)
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  1. What is cost variance analysis?
    Comparison of actual with standard input amounts and prices
  2. What is an efficiency variance?
    Difference between budgeted and actual results due to differences between budgeted and actual inputs per unit of output

    Standard price x (actual quantity - (standard quantity x actual volume))
  3. What is favorable variance?
    Variance that, taken alone, results in an addition to operating profit
  4. What are financial budgets?
    Budgets of financial resources

    Example: cash budget, budgeted balance sheet
  5. What is a flexible budget?
    Budget that indicates revenues, costs, and profits for different levels of activity

    Generated at the end of the year based on actual sales and production volume, and manufacturing standards

    Helps identify source of a variance
  6. What is the flexible budget line?
    Expected monthly costs at different output levels (Estimated cost-volume line)
  7. What is a flexible production budget?
    Standard input price x standard input quantity allowed for actual output

    Aka flexible budget amount
  8. What is "management by exception"?
    Management practice by which managers focus on collecting observed variances (measure different variances, compare them, and find reasons for exceptional differences)
  9. What are operating budgets?
    • Budgeted income statement
    • Production budget
    • Budgeted cost of goods sold
    • Supporting budgets
  10. What is a price variance?
    Difference between budgeted and actual costs due to changes in cost of inputs

    (actual price - standard price) x actual quantity
  11. What is a production volume variance?
    Variance due to difference between budgeted and actual volume used to allocate fixed costs
  12. What is profit variance analysis?
    Analysis of causes of differences between budgeted and actual profits
  13. What its sales activity variance?
    • Difference between the operating profits in the master and flexible budget due to difference in budgeted and actual sales volume
    • Aka sales volume variance
  14. What is the sales price variance?
    • Difference between actual revenue and revenue of actual units sold at budgeted sales price
    • (what company thought it could sell for vs. which price product actually sold for)

    Actual revenue - (actual units sold x budgeted selling price)
  15. What is the spending (or budget) variance?
    Price variance for fixed overhead
  16. What is the standard cost sheet?
    Form providing:

    - standard quantities of inputs used to produce one unit of output

    - standard prices for inputs
  17. What is standard costing?
    Accounting method that signs costs to cost objects at predetermined amounts
  18. What is a static budget?
    • Budget for one single activity level
    • Usually the master budget
    • Created at the beginning of the year using estimated sales and production volume, and manufacturing standards
  19. What is the total cost variance?
    Difference between budgeted and actual results

    = price variances + efficiency variances
  20. What is an unfavorable variance?
    Variance that, taken alone, reduces operating profit
  21. What its a variance?
    • Difference between budgeted and actual outcome
    • Useful in explaining differences between actual and budgeted income

    Actual amount - budgeted amount = variance
  22. What is the difference between a price standard and an input standard?
    • Price standard: expected price paid
    • Input standard: expected units/ amount of input
  23. How is the quantity of input calculated that would be expected at the actual production volume? (SQA)
    Standard quantity of input x actual volume

    (= standard input quantity allowed for actual output)
  24. What is a flexible budget variance?
    • Difference between budgeted cost and actual cost for actual output
    • Combination of price and efficiency variances

    (actual price x actual quantity) - (standard price x standard quantity x actual volume)
  25. What is variance analysis and what is it used for?
    Analysis of differences between actual and budgeted performance

    • Used to:
    • 1. Evaluate performance of individuals and business units
    • 2. Identify possible sources of deviations of actual from budgeted performance

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