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Chapter 10
PowerPoint Authors:
Susan Coomer Galbreath, Ph.D., CPA
Charles W. Caldwell, D.B.A., CMA
Jon A. Booker, Ph.D., CPA, CIA
Cynthia J. Rooney, Ph.D., CPA
Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
10-2
Standard Costs
Standards are benchmarks or “norms” for
measuring performance. In managerial accounting,
two types of standards are commonly used.
Standard Costs
Deviations from standards deemed significant
are brought to the attention of management, a
practice known as management by exception.
Standard
Amount
Direct
Material
Direct Manufacturing
Labor Overhead
Variance Analysis
Variance Analysis
Spending Variance
(3) – (1)
10-15
Spending Variance
(3) – (1)
10-16
Spending Variance
(3) – (1)
10-17
Spending Variance
(3) – (1)
10-18
Spending Variance
(3) – (1)
10-19
Learning Objective 1
Materials Variances:
Using the Factored Equations
Materials quantity variance
MQV = (AQ × SP) – (SQ × SP)
= SP(AQ – SQ)
= $5.00/kg (210 kgs – (0.1 kg/parka 2,000 parkas))
= $5.00/kg (210 kgs – 200 kgs)
= $5.00/kg (10 kgs) = $50 U
Learning Objective 2
Quality of production
supervision.
Quality of training
provided to employees.
Production Manager
10-43
Learning Objective 3
Quantity variance
$0
10-65
Price variance
$21 favorable
10-66
Larger variances, in
How do I know dollar amount or as
which variances to a percentage of the
investigate? standard, are
investigated first.
10-67
Favorable Limit
• •
• • •
Desired Value
• •
Unfavorable Limit •
•
1 2 3 4 5 6 7 8 9
Variance Measurements
10-68
Advantages
Enhances
Simplified responsibility
bookkeeping accounting
10-69