Class #18 Notes
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This 0 page Class Notes was uploaded by Brandon Sangster on Monday November 9, 2015. The Class Notes belongs to Acc 204 at Pace University taught by Picheng Lee in Fall 2015. Since its upload, it has received 14 views. For similar materials see Financial Accounting in Business at Pace University.
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Date Created: 11/09/15
Brandon Sangster Class18 Managerial Accounting Prof Picheng Lee Chapter 10 Standard Costs and Variances Price Standards Specify how much should be paid for each unit of input Quantity Standards Specify how much of an input should be used to make a product or provide a service Standard Rate per hour It is a single rate of how much someone is supposed to pay for the unit Standards Hours per Unit How much time is invested for a unit of a product to be produced Variance Analysis in this chapter is measured by the difference between actual and standard price and the difference in quantity comparing to see if they fall under being favorable or unfavorable Example1 Materials Variance Actual AQxAP Flexible AQxSP Planned SQxSP 210x490 210x5 00 01x2000x5 00 1029 1050 1000 Price Variance 21 Favorable Quantity Variance 50 Unfavorable Spending Variance 29 Unfavorable Example 2 Labor Variance Actual AHxAP Flexible AHxSP Planned SHxSP 2500x1050 2500x10 2000x12x10 26250 25000 24000 Price Variance 1250 Unfavorable Quantity Variance 1000 Unfavorable Spending Variance 2250 Unfavorable Production Managers are accountable for labor variances which are having a mix of skill levels assigned to work tasks level of employee motivation quality of production supervision and quality of training provided to employees Example 3 Variable Manufacturing Overhead Actual AHxAP Flexible AHxSP Planned SHxSP 2500x42 2500x400 2000x12x400 10500 10000 9600 Price Variance 500 Unfavorable Quantity Variance 400 Unfavorable Spending Variance 900 Unfavorable