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by: Rachel Moore

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# Chapter 11 Notes ACCT 2102

Rachel Moore
UGA
GPA 3.33

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These notes cover chapter 11 which was discussed in class April 11th through April 15th.
COURSE
Principles of Accounting II
PROF.
Farmer
TYPE
Class Notes
PAGES
4
WORDS
CONCEPTS
ACCT2102, Farmer, uga, Chapter 11
KARMA
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## Popular in Accounting

This 4 page Class Notes was uploaded by Rachel Moore on Sunday April 17, 2016. The Class Notes belongs to ACCT 2102 at University of Georgia taught by Farmer in Spring 2016. Since its upload, it has received 53 views. For similar materials see Principles of Accounting II in Accounting at University of Georgia.

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Date Created: 04/17/16
ACCT 2102 April 11, 2016 – April 15, 2016 Chapter 11 Notes Standard Costs and Variances A standard unit cost is a budget for a singe unit of product. Direct Material • ???????????????????????????????? ???????? ???????????????? ???????????? ???????????????? = ???????????????????????????????? ???????????????????????????????? ???????? ???????? × ???????????????????????????????? ???????????????????? ???????? ???????? • 2 pounds of DM and DM is \$5 per pound ▯ standard DM unit cost = \$10 Direct Labor • ???????????????????????????????? ???????? ???????????????? ???????????? ???????????????? = ???????????????????????????????? ???????????????????????????????? ???????? ???????? × ???????????????????????????????? ???????????????? ???????? ???????? • 5 hours of DL and DL wage rate is \$10/hour ▯ standard SL unit cost = \$50 Manufacturing Overhead • ???????????????????????????????? ???????????? ???????????????? ???????????? ???????????????? = ???????????????????????????????? ???????????????????????????????? ???????? ???????????????? ???????????????????????? × ???????????????? • 5 hours of DL and POHR of \$8 per DL hours ▯ standard MOH unit cost = \$40 Using examples above, determine the standard unit cost… \$10 + \$50 + \$40 = \$100 **The standard quantity is als referred to as the input ratio.** The Flexible Budget Variance can be further divided into a Price Variance and a Quantity Variance. • Price/Rate Variance – the difference betweem what we paid and what we expected to pay • Quantity/Efficiency variance – the difference between what we used and expected to use for out actual output In this chapter, (+) and (-) signs are important with variances. A positive variance is an unfavorable variance. A negative variance is a favorable variance. Variances will always be calculated as ???????????????????????? – ????????????????????????. Direct Material Variances DM Price Variance • Difference between what we paid and what we expected to pay for DM • Can first be calculated at point of purchase Created By: Rachel Moore Not for redistribution. • Responsible party is purchasing manager ???????? ???????????????????? = ???????????????????????????????? ????????????????ℎ???????????????? × ???????????????????????? ???????????????????? – ???????????????????????????????? ???????????????????? ???????? ???????????????????? = (???? ????????????????ℎ)(???????????????????????? \$) – (???? ????????????????ℎ)(???????????????????????????????? \$) DM Quantity Variance • Difference between the quantity used and the quantity expected for actual output • Can first be calculated at point of production • Responsible party is production manager ???????? ???????????????????????????????? = ???????????????????????????????? ???????????????????? × (???????????????????????????????? ???????????????? – ???????????????????????????????? ????????????????????????????????) ???????????????????????????????? ???????????????????????????????? = ???????????????????????????????? ???????????????????? ???????????????????? × (???????????????????????? ????????????????????????) Total DM Variance ???????????????????? ???????? ???????????????????????????????? = ???????????????????????? – ???????????????????????? ???????????????????? ???????? ????????????.= (???????????????????????????????? ????????????????)(???????????????????????? \$) – (???????????????????????????????? ????????????????????????????????)(???????????????????????????????? \$) ???????? ???????????????????? = ???????????? ????????????????ℎ (???????????? \$ − ???????????? \$) ???????? ???????????????????? = 106,000 (\$3.15 − \$3.20) ???????? ???????????????????? = < \$5,300 > (????) ???????? ???????????????????????????????? = ???????????? \$ ???????????? ???????????????? − ???????????? ???????????????????????????????? ???????? ???????????????????????????????? = \$3.20 (104,000 – 20,000 5 ) ∗ ???????? ???????????????????????????????? = \$12,800 (????) *\$16 / \$3.20 = 5 lbs/unit ???????????????????? ???????? ???????????????????????????????? = (???????????? ????????????????)(???????????? ????????????????????) – (???????????? ????????????)(???????????? ????????????????????) ???????????????????? ???????? ???????????????????????????????? = (104,000)(\$3.15) – (100,000)(\$3.20) ???????????????????? ???????? ???????????????????????????????? = \$7,600 (????) How would our calculations change if 106,000 pounds of direct material were used during the period? DM quantity would change from \$12,800 (U) to \$19,200 (U). This would also change the total DM variance to \$13,900 (U). Created By: Rachel Moore Not for redistribution. Direct Labor Variances DL Rate Variance • Difference between rate paid and the rate expected • Can first be calculated at the point of production • Responsible party is production manager ???????? ???????????????? = ℎ???????????????? ???????????????????????? (???????????????????????? ???????????????? − ???????????????????????????????? ????????????????) DL Efficiency Variance • Difference between hours logged and hours expected for actual output • Can first be calculated at the point of production • Responsible party is production manager ???????? ???????????????????????????????????????? = ???????????????????????????????? ???????????????? (ℎ???????????????? ???????????????????????? – ℎ???????????????? ????????????????????????????????) Total DL Variance ???????????????????? ???????? ???????????????????????????????? = ???????? ???????????????? + ???????? ???????????????????????????????????????? ???????????????????? ???????? ????????????.= (ℎ???????? ????????????????????????)(???????????????????????? ????????????????) − (ℎ???????? ????????????????????????????????)(???????????????????????????????? ????????????????) ???????? ???????????????? = ℎ???????? ???????????????????????? (???????????????????????? ???????????????? − ???????????????????????????????? ????????????????) ???????? ???????????????? = 42,300 (\$9 − \$10) ???????? ???????????????? = < \$42,300 > (????) ???????? ???????????????????????????????????????? = ???????????????????????????????? ???????????????? (ℎ???????? ???????????????????????? − ℎ???????? ????????????????????????????????) ???????? ???????????????????????????????????????? = \$10 (42,300 – 20,000 2 ) ???????? ???????????????????????????????????????? = \$23,000 (????) ???????????????????? ???????? ???????????????????????????????? = (ℎ???????? ????????????????????????)(???????????? ????????????????) – (ℎ???????? ????????????)(???????????? ????????????????) ???????????????????? ???????? ???????????????????????????????? = (20,000)(\$9) – (40,000)(\$10) ???????????????????? ???????? ???????????????????????????????? = \$19,300 (????) Will there ever be a difference between DL hours logged and the DL hours used? NO! Created By: Rachel Moore Not for redistribution. Formula Review ???????? ???????????????????? = ???????????? ????????????????ℎ (???????????? \$ − ???????????? \$) \$ = “????????????” (\$/???????? − \$/????????) ???????? ???????????? = ???????????? \$ (???????????? ???????????????? – ???????????? ????????????????????????) \$ = \$/????????????(???????????? –(????????????????????)(????????????/????????????????)) ???????? ???????????????? = ℎ???????? ???????????????????????? (???????????? \$ − ???????????? \$) \$ = ℎ???????? (\$/ℎ???? − \$/ℎ????) ???????? ???????????????????????????????????????? = ???????????? \$ (ℎ???????? ???????????????????????? – ℎ???????? ????????????????????????) \$ = \$/ℎ???? (ℎ???????? – (????????????????????)(ℎ????????/????????????????)) Chapter 11 Class Problem ???????? ???????????????????? = ???????????? ????????????????ℎ (???????????? \$ − ???????????? \$) 1. \$55,650÷10,500 = \$5.30/ft \$3,150 = \$55,650 − (\$5)(10,500) 2. \$7,650 U 3. \$8/DLhr ???????? ???????????? = ???????????? \$ (???????????? ???????????????? – ???????????? ????????????????????????) 4. \$4,500 = \$5 (10,500 − (3)(3,200)) In the equations to the left, the information in the problem is in red. ???????? ???????????????? = ℎ???????? ???????????????????????? (???????????? \$ − ???????????? \$) The information that was solved for −\$2,450 = 4,900 (\$7.50 − \$8) is in blue. ???????? ???????????????????????????????????????? = ???????????? \$ (ℎ???????? ???????????????????????? – ℎ???????? ????????????????????????) \$800 = \$8 (4,900 − (1.5)(3,200)) Created By: Rachel Moore Not for redistribution.

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