Archive about 'Standard Costing & Variance Analysis'

How to do we treat Idle Capacity in Cost Accounts?(Part 2 of 2)

Tweet Idle capacity can be broadly divided into  Normal or AbnormalTreatment of NORMAL IDLE CAPACITY in the cost accounts: Due to unavoidable reasons are included in works overheads and absorbed into the cost of production either by inflating the overhead rate or  by means of a supplementary overhead rate ( see article on details of […]

In Cost Account, explain what is Idle Capacity (Part 1 of 2)

Tweet Idle Capacity: That part of practical activity which cannot be utilized and beyond management control Mainly due to lack of demand, non-availability of materials, shortage of labour, seasonal nature of product and lower sales expectancy Idle capacity is the difference between the practical capacity and the capacity based on sales expectancy. It is therefore  […]

List Of Topics Under The Heading Standard Costing & Variance Analysis

Tweet Click to the respective topic on  Standard Costing & Variance Analysis Content Page On STANDARD COSTING & VARIANCE ANALYSIS 1.0 Uses and Advantages Of Standard Costing 2.0 The Difference between Standard Costing and Variance Analysis 3.0 Main Difference Between Historical Costing and Standard Costing 4.0 The Different Types Of Standard 5.0 Total Direct Material […]

Explain what is Sales Price Variance & Sales Volume Variance

Tweet Management besides reviewing all the expenditure variance also take great care to investigate any variances in sales revenue. This is because any variances in sales revenue has a direct impact upon the contribution and profitability of the business. In a marginal cost system, the variances are calculated in contribution terms whereas: In an absorption […]

Explain what is Direct Material Mix And Yield Variances

Tweet Direct Material MIX Variance Measures the cost of any variation from the standard mix. Formula: [Actual Input Quantity-Budgeted material input quantity for the output produced] x [Standard weighted average cost per input unit-Standard cost per input unit] Direct Material YIELD Variance · A measure of the cost effect of the difference between the actual […]

Explain what is Fixed Production Overhead Variance

Tweet Fixed Production Overhead Variance: Is the difference between the PLANNED and ACTUAL FIXED production overhead incurred. The total fixed production overhead variance is: [Standard Fixed Production Overhead] Less:[Actual Fixed Production Overhead

Explain what is Variable Overhead Expenditure Variance

Tweet VARIABLE overhead variances comprises: · Expenditure variance and · Efficiency variance CAUSES OF VARIABLE EXPENDITURE OVERHEAD VARIANCE: For Variable Expenditure variance, the reasons are: 1. price changes in overhead items; 2. inaccurate estimates of one or more item comprising variable overhead; 3. efficiency or inefficiency in the use of the variable overhead 4. inadequate […]

Explain what is Overhead Variance

Tweet OVERHEAD VARIANCE is The DIFFERENCE between the Actual Overhead Incurred and the amount of overhead absorbed to production through the use of a standard overhead rate. – For the VARIABLE overhead, the standard rate is computed by taking the budgeted variable overhead of the period divided by the budgeted volume for the period. – […]

Standard Costing Question & Answer For Overhead Variance,Fixed Production Overhead Volume Variance, Capacity Variance And Productivity Variance

Tweet      Actual data of Company A’s Cost Department for month of June’07: Number of units produced 180 Overhead costs $19,400 Hours worked 4,050 Number of working days 20      Company A’s Budget & Standard Costing figures Standard hours per unit 20 Standard overhead rate per hour $6.25 Standard fixed overhead rate per […]

Standard Costing Question & Answer For Materials & Labor Variances

Tweet Question:   You are required to calculate the variance in respect of the following:       (a) Materials: Standard price-$4.15 per unit; actual price-$4.28 per unit: material requisitioned 1,000 units; production achieved 1,020     (b) Labor Standard rate-$1.80 per hour; rate paid $1.95 per hour; standard time allowed per article 8 minutes; […]