Accounting 102 Chapter 11

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Accounting 102 Chapter 11
2012-04-25 02:15:13

chapter 11
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  1. Difference standards and budgets
    • standard is a unit amount. A budget is a total amount
    • budget data not journal in cost accounting systems standard yes
  2. Standard direct materials cost per unit
    Std DM Price x Std DM Quantity
  3. Standard direct labor cost per unit
    Std DL Rate x Std DL Hours
  4. Manufacturing Overhead
    • Budgeted Overhead Costs / Expected Standard Activity Index.
    • ex: $40,000 / 33,333 hours = 1.2 or 120%
    • Predetermined rate is 120% of direct labor cost DLC=$3.25 -->$3.25 x 1.2 = $3.9
    • ALT METH: BUD OH $132,000 Std Dir Hrs 26,400=5
    • Std hours per unit 2 --> 5x2=10
  5. Total Material Variance
    (AQ x AP) - (SQ x SP)
  6. Materals Price Variance
    AQ x (AP-SP)
  7. Materals Quantity Variance
    SP x (AQ-SQ)
  8. Causes of Materials Variances
    • purchasing department = price paid for raw materials
    • materials quantity variance is in the production department
  9. Total Labor Variances
    (AH x AR) - (SH x SR)
  10. Labor Price Variance
    AH x (AR - SR)
  11. Labor Quanity Variance
    SR x (AH - SH)
  12. Causes of Labor Price Variances
    • 1-pying wrkers diff wages than exp 2-misallocation of workers
    • Labor quantity variances relate to the efficiency of workers
    • traced
    • to the production department
  13. Total Overhead Variance
    Actual OH - OH Applied (based on std hours allowed)
  14. Causes of Manufacturing Overhead Variances
    • over or underspending on overhead items = prod dept
    • inefficient use of overhead = prod dept
  15. Balanced scorecard
    • 1.Employs both financial and nonfinancial measures. (For example, ROI is a financial measure; employee turnover is a nonfinancial measure.)
    • 2.Creates linkages so that high-level corporate goals can be communicated all the way down to the shop floor.
    • 3. Provides measurable objectives for such nonfinancial measures as product quality, rather than vague statements
    • such as “We would like to improve quality.”
    • 4.Integrates all of the company's goals into a single performance measurement system, so that an inappropriate amount of weight will not be placed on any single goal.