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Acct. Ch. 8
Goessel Acct. Ch. 8
Term | Definition |
---|---|
Management by exception | A management system that compares actual results to a budget so that significant deviations can be flagged as exceptions and investigated further. |
Planning Budget | Is prepared before the period begins and is valid for only the planned level of activity. |
Flexible Budget | Is an estimate of what revenues and costs should have been, given the actual level of activity for the period. |
Revenue Variance | Is the difference between what the total revenue should have been, given the actual level of activity for the period, and the actual total revenue. |
Spending Variance | Is the difference between how much a cost should have been, given the actual level of activity, and the actual amount of the cost. |
Standard Price per unit | For direct materials, should reflect the final delivered cost of the materials. |
Standard Quantity per unit | For direct materials, should reflect the amount of material required for each unit of finished product as well as an allowance for waste. |
Standard Rate per hour | For direct labor, should include hourly wages, employment taxes, and fringe benefits. |
Standard Hours per unit | Also called the standard direct labor time, is perhaps the single most difficult standard to determine. |
Standard Cost Card | Shows the standard quantities and costs of the inputs required to produce a unit of a specific product. |
Standard Cost per unit | For variable manufacturing overhead, is computed the same way as for direct materials or direct labor-the standard quantity allowed per unit of output is multiplied by the standard price. |
Quantity Variance | Is the difference between how much of an input was actually used and how much should have been used and is stated in dollar terms using the standard price of the input. |
Price Variance | Is the difference between the actual price of an input and its standard price, multiplied by the actual amount of input purchased. |
Standard Quantity Allowed for actual output | Also known as standard hours allowed for actual output, when dealing with direct labor and variable overhead, means the amount of an input that should have been used to produce the actual output of the period. |
Materials Price Variance | Measures the difference between the actual price per unit of an input and its standard price, multiplied by the actual quantity purchased. |
Materials Quantity Purchased | Measures the difference between the actual quantity of materials used in production and the standard quantity allowed for the actual output, multiplied by the standard price per unit of materials. |
LaborEfficiency Variance | Measures the difference between the actual hours taken to complete a task and the standard hours allowed for the actual output, multiplied by the standard hourly rate. |
Labor Rate Variance | Measures the difference between the actual hourly rate and standard rate, multiplied by the actual number of hours worked during the period. |
Variable Overhead Efficiency Variance | Measures the difference between the actual level of activity and the standard activity allowed, multiplied by the variable part of the predetermined overhead rate. |
Variable Overhead Rate Variance | Measures the difference between the actual variable overhead cost incurred during a period and the standard cost that should have been incurred based on the activity of the period. |