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26 Cards in this Set
- Front
- Back
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Material mix variance = |
Mix differs from the predetermined mix use to calculate standard cost |
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Material yield variance = |
Difference between standard and actual output for a given level of activity (a usage variance for all materials as a whole) |
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Material mix variance (individual units method) = (formula) |
(AM-SM) x SP |
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Material mix variance (weighted average method) = (formula) |
(AM-SM) x (WP-SP) |
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Material yield variance = (formula) |
(AQ-SQ) x SP, for units of output |
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When are mix and yield variances irrelevant? |
When the mix can't be controlled |
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Labour mix variance = |
Mix of labour differs form the predetermined mix used to calculate standard cost |
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Labour yield variance = |
Difference between standard and actual output for a given level of hours |
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Labour mix variance is AKA |
Team composition variance |
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Labour yield variance is AKA |
Team productivity variance |
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Labour mix variance (individual units method) = (formula) |
(AQ-SQ) x SP |
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Labour mix variance (weighted average method) = (formula) |
(AQ-SQ) x (WP-SP) |
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Labour yield variance = (formula) |
(AQ-SQ) x SP, for units of output |
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What has to be accounted for before calculating labour mix and yield variances? |
Idle time variance |
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Limitations of mix and yield variances (5) |
Only useful when controllable Interdependent on each other Standard mix can become obsolete Control methods can affect quality Based on standard prices, so need additional price variance calculations |
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Sales mix contribution variance (individual units method) = (formula) |
(AQ-SQ) x SCo |
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Sales mix contribution variance (weighted average method) = (formula) |
(AQ-SQ) x (WCo-SCo) |
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Sales quantity contribution variance = (formula) |
(AQ - Budgeted Sales Quantity) x SCo |
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Benefits of sales mix/quantity variances (4) |
Can identify sales trends of individual products Quantity variance can identify change in market size or market share Mix variance can gauge success of marketing campaigns Improved responsibility accounting as specific manager performance can be measured |
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Limitations of sales mix/quantity variances (4) |
May not be controllable Must be aware of interdependencies Mix variance is only relevant if products have some sort of relationship Difficult to apply to very broad product ranges |
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Planning variance = |
Result of inaccurate forecasting (difference between budget and a revised standard) |
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Operational variance = |
Variance after taking into account planning variance |
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Planning variance = (formula) |
SC.AQ - (Revised cost x AQ) |
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Reasons for changing cost standard (4) |
Change in one of the materials Unexpected increase in market prices Change in working methods Unexpected change in rate of pay |
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Benefits of calculating a planning variance (4) |
More useful in a changing environment Gives up-to-date results Better motivator as more realistic Identifies planning deficiencies |
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Problems with calculating a planning variance (4) |
A revised standard is subjective Time consuming Can be manipulated Can cause conflict between planning and operating staff |
