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17 Cards in this Set

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  • Back
the two ways of managing variable overhead costs are
eliminate non value added costs and reduce consumption of the cost allocation bases
the two ways of managing fixed overhead costs are
eliminate non value added costs, and plan for appropriate capacity levels
standard costing is a costing system that
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
budgeted variable overhead cost-allocation is developed in four steps
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
budgeted variable overhead cost rate per output unit equals
budgeted input allowed per output unit x budgeted variable overhead cost rate per input unit
variable overhead flexible budget variance measures
the difference between actual variable overhead costs incurred and flexible budget variable overhead amounts
variable overhead flexible budget variance equals
actual costs incurred - flexible budget amount (flexible budget amount = flex budget hours per output unit x flexible budget VMOH costs per machine hour)
VOH efficiency variance =
(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)
causes for actual machine hours exceeding budgeted machine hours
workers were less skilled than expected, inefficiently scheduled jobs, machines were not maintained in good operating condition, machine time standards were set too tight
variable overhead spending variance is
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
fixed overhead flexible-budget variance =
actual costs incurred - flexible budget amount
fixed overhead spending variance =
actual costs incurred - flexible budget amount
production volume variance =
budgeted fixed overhead - fixed overhead allocated using budgeted input allowed for actual output units produced
Journal entries for FMOH costs and variances
1 FMOH
* Salaries payable
2 WIP Control
* FMOH allocated
3 FMOH allocated
FMOH spending variance
FMOH production-volume variance
* FMOH Control
what variances can be calculated for variable overhead
overhead efficiency variance
overhead spending variance
overhead efficiency variance focuses on the
difference between the actual quantity of the cost allocation base used relative to the budgeted quantity of the cost allocation base
the variable overhead spending variance focuses on the difference between
the actual cost per unit of the cost-allocation vase relative to the budgeted cost per unit of the cost-allocation base