Save
Upgrade to remove ads
Busy. Please wait.
Log in with Clever
or
show password
Forgot Password?
Don't have an account?  Sign up 
Sign up using Clever
or
Username is available taken
show password


Make sure to remember your password. If you forget it there is no way for StudyStack to send you a reset link. You would need to create a new account. Your email address is only used to allow you to reset your password. See our Privacy Policy and Terms of Service.

Already a StudyStack user? Log In

Reset Password
Enter the associated with your account, and we'll email you a link to reset your password.
focusNode
Didn't know it?
click below
 
Knew it?
click below
Don't Know
Remaining cards (0)
Know
0:00
edit
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.

  Normal Size     Small Size show me how

A Level Accounting

Standard Costing

QuestionAnswer
Define Standard Costing Standard costing is a method used to compare the actual costs of production against expected costs (Standard Cost).
Explain what a favourable variance is Favourable variance indicates profits are greater than expected.
Describe what is meant by an adverse variance Adverse variance suggests the overall profit is less than expected.
State the formula to calculate Actual Quantity for Materials Actual Quantity for Materials is always Actual Units x Actual Material used per unit
State the formula to calculate Actual Labour Hours Actual Labour Hours is always Actual Units x Actual Labour Hours per unit
State the formula to calculate Standard Quantity for Materials Standard Quantity for Materials is always Actual Units x Standard Material used per unit
State the formula to calculate Standard Labour Hours Standard Labour Hours is always Actual Units x Standard Labour hour per unit
Formula for Material Price Variance Actual Quantity for Materials x (Standard Price – Actual price)
Formula for Sales Price Variance Actual Quantity (will be provided) x (Actual Price – Standard price)
Formula for Sales Volume Variance Standard Price x (Actual Quantity (will be provided) – Standard Quantity (will be provided) )
Formula for Material Volume Variance Standard Price x (Standard Quantity – Actual Quantity)
Formula for Labour Rate Variance Actual Labour Hours x (Standard Labour Cost per hour – Actual Labour Cost per hour)
Formula for Labour Efficiency Variance Standard Rate x (Standard Labour Hours – Actual Labour Hours)
If you are asked to calculate Price Variances then what will the formula ALWAYS start with? If you are asked to calculate Price Variances then the formula will ALWAYS start with Actual Quantity.
If you are asked to calculate Volume Variances , then what will the formula ALWAYS start with? If you are asked to calculate Volume Variances, then the formula will ALWAYS start with Standard Price .
Actual Quantity x (Standard Price –Actual price) is a formula that can be used to work out which two variances? Material Price Variance and Sales Price Variance
Standard Price x (Standard Quantity –Actual Quantity) is a formula that can be used to work out which two variances? Materials Volume and Sales Volume Variance
Define what a flexed budget is A Flexed Budget is a budget that has been adjusted to reflect the actual level of activity during a specific period.
Explain why a flexed budget is used It is of no use to compare costs at one level of production with the costs at another level of production . These variance would make no sense. Thus, it is necessary to flex the budget so like with like comparisons can be made.
Describe how a flexed budget works Three budgets will be created side by side (1) Original Budget (using budgeted units and figures) (2) Flexed Budget (using actual units but budgeted figures) (3) Actual budget (using actual units and actual figures)
State three advantages of Standard Costing (1) Assist with decision making e.g. selling price of a product (2) Assist in planning e.g. plan the costs and quantity of resources needed (3) Controlling costs e.g. standard costs are compared with actual costs and variances calculated so that action can be taken
State three disadvantages of Standard Costing (1) Prices of materials, labour and overheads may fluctuate (figures go out of date) (2) Technology develops so fast that information can become out of date (3) It is best used by businesses that have repetitive processes so that the resetting of standard costs is kept to a minimum
Created by: durquhart1
Popular Accounting sets

 

 



Voices

Use these flashcards to help memorize information. Look at the large card and try to recall what is on the other side. Then click the card to flip it. If you knew the answer, click the green Know box. Otherwise, click the red Don't know box.

When you've placed seven or more cards in the Don't know box, click "retry" to try those cards again.

If you've accidentally put the card in the wrong box, just click on the card to take it out of the box.

You can also use your keyboard to move the cards as follows:

If you are logged in to your account, this website will remember which cards you know and don't know so that they are in the same box the next time you log in.

When you need a break, try one of the other activities listed below the flashcards like Matching, Snowman, or Hungry Bug. Although it may feel like you're playing a game, your brain is still making more connections with the information to help you out.

To see how well you know the information, try the Quiz or Test activity.

Pass complete!
"Know" box contains:
Time elapsed:
Retries:
restart all cards