Test 4 Study Guide
Test 4 Study Guide ACCT2521
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This 3 page Study Guide was uploaded by Bailey Lambert on Monday April 18, 2016. The Study Guide belongs to ACCT2521 at East Carolina University taught by Azita Movahed in Spring 2016. Since its upload, it has received 37 views. For similar materials see Managerial Accounting in Accounting at East Carolina University.
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Date Created: 04/18/16
ACCT 2521 Exam 4 Study Guide Chapter 10 Decentralization Advantages: Frees top MGMT’s time, use of expert knowledge, improves customer relations, provides training, and improves motivation and retention Disadvantages: Duplication of Costs, potential problems achieving goal congruence Responsibility Centers Part of an organization whose manager is accountable for planning and controlling activities Types: Cost Center, Revenue Center, Profit Center, Investment Center Potential Important Definitions Master Budget Variance: Difference between the actual revenues and expenses and the master budget Volume Variance: The difference between the Master budget and flexible budget (arises only because of the actual volume differs than what was anticipated) Flexible Budget Variance: The difference between the flexible budget and the actual results Favorable vs. Unfavorable: Profit Revenue Cost Actual > Budgeted F F U Actual < Budgeted U U F Standard Cost of DM Standard quantity of DM * standard price of DM = Standard Cost of DM/case Standard cost of DL Standard Quantity pf DL * Standard Price of DL= Standard Cost of DL/case Standard Cost of Manufacturing Overhead Variable: Standard Quantity of DL * Variable MOH Rate= Standard Variable MOH/case Find Variable MOH Rate: Total Estimated vMOH/ Total Estimated amount of Allocation Fixed: Standard Quantity of MH * Fixed MOH Rate= Standard Fixed MOH per case Find Fixed MOH Rate: Total Estimated fMOH/Total estimated amount of allocation Add Everything Above to find the Total Standard Cost per Case ACCT 2521 Exam 4 Study Guide Flexible Budgets A budget prepared for a different level of volume than that which was originally anticipated Creating a Flexible Budget (like exhibit 10-11): Managers use actual volume achieved and the original budget assumptions (shown in parentheses). Flexible Budget (Red): Sales Revenue (28724 * $20/case) Sales Commission (28724 * 1.50) Shipping Expense: 28724 *2.00 Bad Debt Expense: 574480 of flexible budget sales revenue (80% credit at 1%) = 4596 Fixed Operating Expense should not be affected (they are the same as originally budgeted) For Volume Variance (Green) : Subtract the cost and determine if it is Favorable or Unfavorable Example: 500000- 574480= 74,480 F Flexible Budget Variance (Yellow): Actual- Flexible Example: 603,225-574,480 Chapter 11 ACCT 2521 Exam 4 Study Guide Standard Costing: Advantage: Provide benchmarks for managers and employees, simplify book keeping, and fit naturally into place in the management world. Disadvantage: Can make incorrect assumptions Different Variances for Each Production Costs DM Price Variance: (AQP x (AP-SP) or AQ x AP- (AQ x SP) = AQ (AQ= Actual Quantity AP= Actual Price DM Quantity Variance: SP x (AQ used- SQA) SQA= Standard DL Rate Variance: AH x (AR – SR) Quantity Allowed for actual DL Efficiency Variance: SR x (AH- SHA) output SP= Standard Price AQP= Actual Quantity Purchase AH= Actual Hours SR= Standard Rate SHA= Standard
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