Cost Accounting Ch 8

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55466
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Cost Accounting Ch 8
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2010-12-12 22:34:57
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Standard Cost Accounting
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Standard Cost Accounting
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  1. Attainable standard
    A performance criterion that recognizes inefficiencies that are likely to result from such factors as lost time, spoilage, or waste.
  2. Balanced scorecard
    A set of performance measures, both financial and nonfinancial, that is used to evaluate an organization’s or a segment of an organization’s performance.
  3. Budget variance (two-variance method)
    The difference between budgeted factory overhead at the capacity attained and the actual factory overhead incurred.
  4. Capacity variance
    Reflects an under-or overabsorption of fixed costs by measuring the difference between actual hours worked, multiplied by the standard over-head rate, and the budget allowance based on actual hours worked.
  5. Controllable variance
    The amount by which the actual factory overhead costs differ from the standard overhead costs for the attained level of production.
  6. Efficiency variance
    The difference between overhead applied (standard hours at the standard rate) and the actual hours worked multiplied by the standard rate; indicates the effect on fixed and variable overhead costs when actual hours worked are more or less than standard hours allowed for the production volume.
  7. Favorable variance
    The difference when actual costs are less than standard costs.
  8. Fixed overhead budget variance
    A measure of the difference between the actual fixed overhead and the budgeted fixed overhead.
  9. Fixed overhead volume variance
    A measure of the difference between budgeted fixed overhead and applied fixed overhead.
  10. Four-variance method
    The analysis of fixed and variable factory overhead costs based on the computation of a spending variance and an efficiency variance for variable costs and a budget variance and a volume variance for fixed costs.
  11. Ideal standard
    A performance criterion that reflects maximum efficiency, with no allowance for lost time, waste, or spoilage.
  12. Labor cost standard
    A predetermined estimate of the direct labor cost required for a unit of product based on estimates of the labor hours required to produce a unit of product and the cost of labor per unit.
  13. Labor efficiency (usage) variance
    The difference between the actual number of direct labor hours worked and the standard hours for the actual level of production at the standard labor rate.
  14. Learning effect
    The process that occurs when employees become more efficient at complex production processes the more often they perform the task.
  15. Management by exception
    As relates to variance analysis, it is the practice of examining significant unfavorable or favorable differences from standard.
  16. Materials cost standard
    A predetermined estimate of the cost of the direct materials required for a unit of product.
  17. Materials price variance
    The difference between the actual unit cost of direct materials and the standard unit cost, multiplied by the actual quantity of materials used.
  18. Materials quantity (usage) variance
    The difference between the actual quantity of direct materials used and the standard quantity for the actual level of production at standard price.
  19. Nonfinancial performance measures
    These are performance measures that are used to evaluate operations, but that are not expressed in dollars, such as the percentage of defective units produced.
  20. Price
    In the context of variance analysis, refers to the cost of materials or the hourly wage rate for direct labor.
  21. Spending variance
    The difference between the actual factory overhead for variable costs and the actual hours multiplied by the standard variable rate. See also Budget variance.
  22. Standard
    A norm or criterion against which performance can be measured.
  23. Standard cost accounting
    A method of accounting for manufacturing costs that can be used in conjunction with either a job order or process cost accounting system. Standard costing makes it possible to determine what a product should have cost as well as what the product actually cost.
  24. Three-variance method
    The analysis of factory overhead costs based on the computation of efficiency, capacity, and budget (spending) variances.
  25. Unfavorable variance
    The difference when actual costs exceed standard costs.
  26. Usage
    The quantity of materials used or the number of direct labor hours worked.
  27. Variable overhead efficiency variance
    A measure of the change in the variable overhead consumption that occurs because of efficient or inefficient use of the cost allocation base, such as direct labor hours.
  28. Variable overhead spending variance
    A measure of the effect of differences in the actual variable overhead rate and the standard variable overhead rate
  29. Variance
    The difference, during an accounting period, between the actual and standard or budgeted costs of materials, labor, and overhead.
  30. Volume variance
    The difference between budgeted fixed overhead and the fixed overhead applied to work in process; the result of operating at a level of production different from the standard, or normal, level.

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