Varience Analaysis
Variance analysis is a technique which is used to determine the difference between the actual & expected value. Variance analysis also explains the reason of difference actual & expected value. Variance analysis is closely related to manufacturers product cost.
Standard Costing and Variance Analysis Case Study: Case A: Effect of assumed standard levels Case B: Factory overhead variance analysis Case A: Effect of Assumed Standard Levels: Harden Company has experienced increased production costs. The primary area of concern identified by management is direct
Standard Costing and Variance Analysis: After studying this chapter you should be able to: Explain how direct materials standard and direct labor standards are set. Compute the direct materials price and quantity variances and explain their significance. Compute the direct labor rate and efficiency
Standard Costing and Variance Analysis Problems & Solution: Problem 1: Materials Variance Analysis: The Schlosser Lawn Furniture Company uses 12 meters of aluminum pipe at $0.80 per meter as standard for the production of its Type A lawn chair. During one month’s operations, 100,000
Standard Costing System Discussion Questions and Answers: Questions: (a) Define standard costs. (b) Name some advantages of standard cost system. See answer A team of management consultants and company executives concluded that a standard cost installation was desirable vehicle for accomplishing the objectives of
Standard Costs-Management by Exception: Learning Objective of the Article: Define and explain the terms “standard cost” and “management by exception”. Definition and Explanation of Standard Cost and Management by Exception: A standard cost is the predetermined cost of manufacturing a single unit or a
Spending Variance in Factory Overhead Learning Objective of the article: Define and explain factory overhead spending variance. How is FOH spending variance calculated? Definition: Factory Overhead spending variance is the difference between actual expenses incurred and the budgeted allowance based on actual hours worked. The
Setting Standard Costs – Ideal and Practical Standards: Learning Objective of the Article: Who provide the inputs in setting standard costs? Define and explain ideal and practical standards. What is the difference between budgets and standards? What is the purpose of standard costing? Setting
Overall or Net Factory Overhead Variance: Definition: Overall or net factory overhead variance is the difference between actually incurred factory overhead and expenses charged into process using the standard factory overhead rate. Formula of Overall or Net Factory Overhead Variance: Overall or net overhead
Direct Materials Price and Quantity Standards: Learning Objective of the articles: Define and explain direct materials price standards and direct materials quantity standards. Explain how direct materials price and quantity standards are set? Contents: Direct Materials Price Standards Direct Materials Quantity Standards Example of
Direct Materials Quantity Variance: Learning Objective of the articles: Define and explain “direct materials quantity variance” and its significance. How is it calculated? How direct materials quantity variance is interpreted? What are the reasons / causes of a favorable and unfavorable direct materials quantity
Direct Materials Price Variance: Learning Objective of the articles: Define and explain “direct materials price variance” and its significance. How is it calculated? How direct materials price variance is interpreted? What are the reasons / causes of unfavorable or favorable materials price variance? Contents:
Direct Labor Standards: Learning Objective of the articles: Define and explain “direct labor standards” . How direct labor rate and direct labor efficiency standards are set? Direct labor price and quantity standards are usually expressed in terms of a labor rate and labor hours.
Direct Labor Rate | Price Variance: Learning Objective of the articles: Define and explain “direct labor rate | price variance /labour rate variance” . How direct labor rate or price variance rate is calculated? What are the reasons / causes of favorable and unfavorable
Direct Labor Efficiency Variance Learning Objective of the article: Define and explain “direct labor efficiency | usage variance” . How direct labor efficiency (labour analysis) or usage variance is calculated? What are the reasons / causes of unfavorable or favorable labor efficiency variance? Contents:
Contribution Margin and Basics of Cost Volume Profit (CVP) Analysis: Learning Objectives: Define and explain contribution margin. Prepare a contribution margin format income statement. What are the advantages of calculating contribution margin? Definition and Explanation of Contribution Margin: Contribution margin is the amount remaining
Advantages and Disadvantages of Standard Costing and Variance Analysis Learning Objective of the article: What are the advantages / benefits and disadvantages / problems / limitations of standard costing system and variance analysis? Advantages / Benefits of Standard Costing System: Standard costing System has
Factory Overhead Idle Capacity Variance: Learning Objective of the article: Define and explain factory overhead idle capacity variance. How is FOH idle capacity variance calculated? What are the reasons of unfavorable idle capacity variance Definition and Explanation: Factory overhead idle capacity variance is the