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fixed overheads variancethis is defined like the difference between the fixed overheads attributed and the standard cost of fixed overheads absorbed
total variable overheads variances if variable overhead expenditure variance shs1 330variable overhead efficiency variance shs320then total
variable overhead efficiency variancebudget for december 2003shsfixed overheads11480variable overheads13120labour hours3280 hoursstandard
variable overhead expenditure variance budget for december 2003shsfixed overheads11480variable overheads13120labour hours3280 hoursstandard
illustration of overhead variance analysisagain for intentions of our demonstrations in overhead variance analysis we will suppose the given basic
developing and insight into labour and material variancethe calculation of labour and material variances is not sufficient we require knowing how the
overhead variancesthis explains how the variable overhead total variance and the fixed overhead total variances calculated you can recall the
typical causes of labour varianceslabour rate variancesa higher rates being paid than planned because of wage raise awardsb lower or higher grade of
typical causes of material variancesprice variancesa paying lower or higher prices than plannedb losing or gaining quantity discounts via buying in
direct labour efficiency variancesit is the difference between the standard hours allowed for the actual production achieved and the hours actually
direct labour rate varianceit is the difference among the actual direct labour rate and the standard direct labour rate for the total hours
usefulness of variance analysiscarefully note that while prices are being charged to production it can be done at the actual or standard price for
price and quality aspect of varianceat this point it is serious to understand that all variance has two aspects a price aspect and a quantity aspect
assignment of variance in variance calculation in variances calculating the calculations require to be detailed sufficient hence the responsibility
importance of variance analysisvariance analysis is aimed at getting practical pointers to the purposes of off-the -standard performance hence
definition of variance analysisvariance analysis can merely be defined like the process of analyzing the difference between the actual cost and the
important points regarding to the variance analysisvariance reporting concentrates on both with favourable and unfavourable variances normally
variance analysisthis section describes how labour material and overhead variances are calculated and what causes every of those variances a chart is
disadvantages of standard costing1 the system of standard costing is very expensive to install a lot of money is spent in studying output
advantages of standard costing1 management via exception the standard costing is an example for management via exception by studying the variances
goal definition and communication - behavioural aspects of standardsgoal definitionthe desired goals should be clearly defined to individuals
motivation - behavioural aspects of standardsvariance analysis and standards setting requires to be carried out like it motivates managers and other
participation - behavioural aspects of standardsit has already been pointed out in the previous paragraph such standard costing systems would be more
goal congruence - behavioural aspects of standardsa perfect variance analysis and standard costing system must enhance goal congruence between asi
behavioural aspects of standardsbudgets and standards rely heavily on the people who have to work to meet them since the detailed nature of standard