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. Key ConceptThe purpose of the control function in management is to make sure that the goals of the organization are being attained.. . Timing of Budgets/Accounting Journal Entries. Approximately four months (sometimes longer) from start of new fiscal year: Operating Budget is compiledDuring each Budget Period (say one month): Budget (Plan) is used to make operating decisionsChanges in sales or production schedules can affect actual operating outcomeAt end of Period (say end of month), firs273
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1. Chapter 4 Special Addendum Discussion of Variances
3. Timing of Budgets/Accounting Journal Entries Approximately four months (sometimes longer) from start of new fiscal year: Operating Budget is compiled
During each Budget Period (say one month): Budget (Plan) is used to make operating decisions
Changes in sales or production schedules can affect actual operating outcome
At end of Period (say end of month), first entry is made to the books reflecting what costs we know to be true and using estimates and actual numbers for pre-selected cost drivers (such as multiplying the estimated predetermined overhead rate times the actual number of labor hours) on costs we will not know for a period of time (eg., manufacturing overhead costs)
When actual bills come in, adjusting journal entries are made to show real COGS.
4. Variance Analysis
5. Standard Costing
6. Standard Costing
7. Ideal vs Practical Standards
8. Ideal vs Practical Standards
9. Standard Costing Topics
10. Flexible Budgeting with Standard Costs
11. Flexible Budgeting with Standard Costs
12. Flexible Budgeting with Standard Costs
13. Flexible Budgeting with Standard Costs
14. Sales Volume Variance
15. Sales Volume Variance
16. Flexible Budget Variance
17. Flexible Budget Variance
18. Flexible Budget Variance
19. Sales Price Variance
20. Variance Analysis
21. Variance Analysis
22. Direct Material Variances
23. Direct Material Variances
24. Direct Material Variances AQ X AP AQ X SP AQ X SP SQ X SP
35,000 X $1.90 35,000 X $2.00 33,600 X $2.00 32,000 X $2.00
= $66,500 = $70,000 = $67,200 = $64,000
$3,500 F $3,200
Price Var. Usage Var.
The model above is when quantities purchased are not the same as quantities used.
25. Direct Material Variances AH X AR AH X SR SH* X SR
8,400 X $12.10 8,400 X $12.00 8,000 X $12.00
= $101,640 = $100,800 = $96,000
$840 U $4,800 U
Rate Var. Efficiency Var.
Total Direct Labor Variance = $840 U + $4,800 U = $5,640 U
*SH = 1,600 chairs X 5 hrs/chair
26. Direct Labor Variances
27. Variable Overhead Variances
Actual Variable AH X SVR SH X SVR
Overhead Expense 8,400 X $3.00 8,000 X $3.00
= $23,720 =$25,200 = $24,000
$1,480 F $1,200 U
Spending Variance Efficiency Variance
Total Variable Overhead Variance = $1,480 F +$1,200 U = $280 F
28. Variable Overhead Variances
29. Fixed Overhead Variances
30. Fixed Overhead Variances Actual Fixed Budgeted Applied
Overhead Expense Fixed Overhead Fixed Overhead
= $16,000 = $15,000 = $16,000
$1,000 U $1,000 F
Spending Variance Volume Variance
31. Overhead Variances
32. Overhead Variances
33. Selling and Administrative Expense Variance
34. Selling and Administrative Expense Variance
35. Selling and Administrative Expense Variance
36. Interpreting and Using Variance Analysis
37. Interpreting and Using Variance Analysis
