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17 Cards in this Set
- Front
- Back
the two ways of managing variable overhead costs are
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eliminate non value added costs and reduce consumption of the cost allocation bases
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the two ways of managing fixed overhead costs are
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eliminate non value added costs, and plan for appropriate capacity levels
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standard costing is a costing system that
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traces direct costs to output produced by multiplying the standard prices by the standard quantities of inputs allowed for actual outputs produced and allocates overhead costs on the basis of the standard overhead costs rates times the standard quantities of the allocation bases allowed for actual outputs produced
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budgeted variable overhead cost-allocation is developed in four steps
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choose the period to be used for the budget, select the cost allocation vases to use in allocating VOH costs to output produced, identify the VOH associated with each cost allocation base, compute the rate per unit of each cost allocation base used to allocate VOH costs to output produced
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budgeted variable overhead cost rate per output unit equals
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budgeted input allowed per output unit x budgeted variable overhead cost rate per input unit
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variable overhead flexible budget variance measures
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the difference between actual variable overhead costs incurred and flexible budget variable overhead amounts
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variable overhead flexible budget variance equals
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actual costs incurred - flexible budget amount (flexible budget amount = flex budget hours per output unit x flexible budget VMOH costs per machine hour)
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VOH efficiency variance =
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(act quantity of variable overhead cost allocation base used for actual output - budgeted quantity of variable overhead cost-allocation vase allowed for actual output) x budgeted variable overhead cost per unit of cost allocation base)
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causes for actual machine hours exceeding budgeted machine hours
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workers were less skilled than expected, inefficiently scheduled jobs, machines were not maintained in good operating condition, machine time standards were set too tight
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variable overhead spending variance is
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the difference between actual variable overhead cost per unit of the cost allocation base and budgeted variable overhead cost per unit of the cost allocation base and the budgeted variable overhead cost per unit of the cost allocation base multiplied by actual qty of variable overhead cost allocation base used for actual output
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fixed overhead flexible-budget variance =
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actual costs incurred - flexible budget amount
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fixed overhead spending variance =
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actual costs incurred - flexible budget amount
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production volume variance =
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budgeted fixed overhead - fixed overhead allocated using budgeted input allowed for actual output units produced
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Journal entries for FMOH costs and variances
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1 FMOH
* Salaries payable 2 WIP Control * FMOH allocated 3 FMOH allocated FMOH spending variance FMOH production-volume variance * FMOH Control |
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what variances can be calculated for variable overhead
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overhead efficiency variance
overhead spending variance |
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overhead efficiency variance focuses on the
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difference between the actual quantity of the cost allocation base used relative to the budgeted quantity of the cost allocation base
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the variable overhead spending variance focuses on the difference between
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the actual cost per unit of the cost-allocation vase relative to the budgeted cost per unit of the cost-allocation base
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