Standard costs and variances

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Ch.10 Excel

Efficiency Variances
Materials:
ECN Engineering change notice
Engineering change to Bill-of-materials
Scrap variance
Production not to specifications
Vendor material not to specifications
Usage Variance
Qty. usage exceeds allowance net of other variances
Direct Labor
Productivity: Downtimes
Material shortages
Process downtime
Engineering change to process
Efficiency
time on productive activity compare with
time allowed to produce
Excel 1 Each per X33 Ea.subass'y Table 21390
Bill of Material: X33 Table Waste Subassy. Std. Material Material 3.8 41400
Scrap Std. Total Std. Std. Std. 11020 62790
P/N Item UM Qty Allow Usage Usage Price Cost ea. Cost ea. 20680 9.100
AA2 Top Assembly unit 1 0% 1 1 in X33 42471 60060
a77 Metal frame unit 1 0.50% 1.005 1.005 $ 11.00 $ 11.055 $ 11.055 45191 14600
l22 Laminate cover sq.' 10 2% 10.200 10.200 $ 0.75 $ 7.650 $ 7.650 1212 3500
s44 side trim linear ft. 9.2 4% 9.568 9.568 $ 0.22 $ 2.105 $ 2.105 2952 6700
t51 top cover sq.' 10 1% 10.100 10.100 $ 4.25 $ 42.925 $ 42.925 4634 84860
LL2 Leg assemblies unit 4 0 4 4 in X33 909
M98 Metal tubing linear ft. 3 6% 3.180 12.720 $ 1.89 $ 6.010 $ 24.041 4 in X33 3024
FF8 end tabs unit 1 0.40% 1.004 4.016 $ 0.04 $ 0.040 $ 0.161 4403
Std. 44631
Total $ 87.936 Cost 51471
3.01
A B C D E F G H I J K L M N 0
Excel 2 Improve from 89% to 93% 38
39
Time & motion 40
Engineered Budget Number Ea.subass'y Table 41
Process [Router] Labor Std. time Allow 100% Prior Period of minutes Labor Hr. Labor Labor 42
For simplicity 1-step assembly - may be many steps per ass'y Time Std. Period Prod.% Std. Std. Std. Std. 43
Qty per UM Qty PFD Time Productivity for Std. Minutes Price Cost ea. Cost ea. 44
4 LL2 Leg assemblies Minutes 6.0 12% 6.8181818182 89% 93% 7.331 $ 12.00 $ 1.466 $ 5.865 4 per table 45
1 AA2 Top Assembly Minutes 11.5 12% 13.068 92% 94% 13.9023210832 $ 14.75 $ 3.418 $ 3.418 1 per table 46
Can Std. 47
6.0 89% Use +G45/(1-H45) Total $ 9.283 Cost 48
This 6 / (1 - 12%) 49
Variable OH 4 LL2 7.331 29.326 50
1 AA2 13.902 13.902 VOHê rate/DL.hr. 51
Minutes 43.228 $ 6.667 $ 4.803 VOH per X33 52
Given in example .
Excel 3
ColaCo Example: Overhead Variances Apx.
Std. each Qty. 200 units
Production and Machine-Hour Data .45 lbs. /unit Actual
Budgeted production 30,000 units $2.60 per lb 100 lbs
Standard machine-hours per unit Std. 3.00 hours Std./Unit 90 lbs. total std $295
Budgeted machine-hours 90,000 hours $234.00 = .50 ilbs./unit
Actual production 28,000 units each 3.00 = $2.95/unit
Standard machine-hours allowed for the actual production 84,000 hours act @ std Q made 28,000 ∆ price/lb $0.35
Actual machine-hours 88,000 hours ∆ lbs. unit 0.05
Cost / Spending Data Quantity/Efficiency/Productivy
BUDGET: Std.Rate per machine hour 0.05 200 10 $2.60 $26.00
Budgeted/Std VOH -variable manufacturing overhead $ 90,000 $1.000 Std. 90000 X $ 1.000 ∆ Qty. each std
Budgeted/std F MFG. OH-fixed manufacturing overhead 270,000 $3.000 Std. $ 270,000 / 90,000 or 10 lbs X $26.00 = $26.00
Total budgeted manufacturing overhead $ 360,000 $4.000 Std. $ 1.000 + $ 3.000
ACTUAL: Rate per Actual hour Price
Actual variable manufacturing overhead given $ 100,000 $1.136 Std. = $3.00 $ 100,000 / 88,000 0.35 100.00 $35.00
Actual fixed manufacturing overhead given 280,000 $3.182 $ 280,000 / 88,000 ∆ Price/lb. Actual
Total actual manufacturing overhead $ 380,000 $4.318
Act. OH Rate $61.00
FLEX budget for Volume Mfg. OH
Units std hrs for act. Qty. 84,000
Variable OH $ 84,000 $ 1.000 Budget rate
Fixed OH $ 270,000 fixed 252000
Total $ 354,000 Act. @ Std.
$ @ Std
Applied or Standard or Absorbed overhead-Mfg.OH $/Driver--Rate # Hrs. Act. FG Qty w. Act. Qty
Units std hrs for act. Qty. 84,000 3.00 28000 $ 354,000 Budget Flex.d
Variable OH $ 84,000 $1.000 3.00 28000 $84,000 $ 380,000 Actual
Fixed OH $ 252,000 $3.000 3.00 28000 $252,000 $ 26,000 Variance/ Performance
Total $ 336,000 $4.000 $336,000 From Std.
$'s into inventory at STD.
Excel 4
Budget vs. Actual Variable Overhead
Managerial Accounting: Variable Fixed Total
Plan $ 90,000 $ 270,000 $ 360,000
FLEX $ 84,000 $ 270,000 $ 354,000
Actual $ 100,000 $ 280,000 $ 380,000
Fav/[Unfav] Volume $ 6,000 $ - 0 $ 6,000 Fav spend less
Fav/[Unfav] Spdg/Perf. $ (16,000) $ (10,000) $ (26,000) UnFav Spend more check
Total/Net variances $ (10,000) $ (10,000) $ (20,000) UnFav Spend more 90,000 Budget Qty
84,000 Std Qty. Actual Prodctn.
Actual vs. Applied OVERHEAD (6,000) difference
Financial Accounting Variable Fixed Total Units $ 4.000 Std. Rate
Actual $ 100,000 $ 280,000 $ 380,000 88,000 $ 1.136 $ 1.000 $ (24,000) under absorded at Std
Applied or Standard or Absorbed overhead-Mfg.OH $ 84,000 $ 252,000 $ 336,000 84,000 Fav/(Unfav) 88,000 84,000 $ 6,000 volume
Rate variance $ (12,000) $ (12,000) (0.136) ∆ rate. X act.hrs. $ (26,000) spending
Efficiency variance $ (4,000) $ (4,000) (4000) ∆ Hrs. X std. rate $ (44,000) sum
Spending or budget variance $ (10,000) $ (10,000) ∆ Actual Spdg - Applied OH
Fixed overhead volume variance Applied/Absorption variance $ (18,000) $ (18,000) ∆ Budget or Plan Spending - Actual spdg. OR ∆ Hrs. Budget - std hrs X std.rate $ 252,000 $ (270,000) $ (18,000)
Total/Net variances $ (44,000)
$ (28,000) BUDGET: ACTUAL:
270,000 280,000
Rate variance $ (12,000) (10,000)
Eff. Performance Var $ (4,000) BUDGET: Applied or Standard or Absorbed overhead-Mfg.OH
Fixed OH variance Spdg. $ (10,000) 90,000 84,000 (6,000)
Total Non-volume variance $ (26,000) $ 3.000 std fxd rate
In CoGS not Applied to Inventory (18,000)
Excel 5
Doing the Accounting with Standard Costs
Only standard material costs enter inventory
Purchase price variances on materials are removed at receipt
Only standard material costs move through inventory
variances are removed at each stage of production
Only std. labor & OH are input to inventory
Labor rate variances are removed at payroll/accrued P/R
Only std. labor & OH are input to inventory
variances are removed at each stage of production
Quarter 2 Year 2xx1
Materials Received DR CR DR CR
material purchased at std. value Matl. Inventory@Std 500 Std. Value
material purchased at actual cost A/P 525 Actual
Difference std - to actual variance acctg in CoGS 25 Variance
if Act > std If std > act unfav.var.
Materials Used DR CR DR CR
Materials into WIP @ std. WIP 615 Std. Value
Materials into WIP @ std. Matl. Inventory@Std 615 Std. Value
Std. matl in Production Completed FG 600 Std. Value @ std. qty per unit
Matl. @ std. used in Production Completed WIP 615 Std. per unit @ act. Qty used
Difference std - to actual variance acctg in CoGS 15 Qty. @ Std per unit
if Act > std Unfav If std > act unfav.var.
Labor Used DR CR DR CR
Direct labor Paid WIP 375
DL paid @ std. rate FG 382
DL rate variance 7 Variance
Difference std - to actual FAV variance acctg in CoGS FAV
if Act > std Unfav If std > act: FAV
Production Completed FG 402 Std $ @ std qty per unit
Production Completed WIP 423
Difference std - to actual variance acctg in CoGS 21
unfav.var.
if Act > std Unfav If std > act: FAV
OVERHEAD above example DR CR
Incurred Actual Expenses $ 380,000 Spending accts.
Expense accounts [variance acct. for applies OH] in CoGS $ 380,000
A/p, Cash, Accrued etc.
Apply or Absorb OH to production
Inventory $ 336,000 aborption accts
Variance account in CoGS $ 336,000
The result is a variance in CoGS of the difference of $380K dr. & $336K credit
a $44K un fav Variance
Capitalized Variances: Variance Recorded in CoGS, if material then portion is to be capitalized into inventory
Production Variances: $000
Material $15 Unfav Days inventory on-hand at QE
Labor $21 Unfav 50
OH $44 Unfav Days of Qtr
$80 Unfav 90
55.6%
% of variances incurrred in inventory 55.6%
Net variances $80
Variances into inventory - WIP & FG 44.4 Unfav Dr. Inventory
Cr. CoGS
RM similar computations

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Ch. 10 HW

Chapter 10
Standard costs HW
Budget [Static] Product is WW
Given 2 Subassy. in each WW
Budgeted WW Production Units 136000 Actual [WW] Production 139000
Sub assy
Cost / Spending Data Complete Hrs per unit Per WW HR.ea. Hr/WW
BUDGET: Given Std. Rate per hour Subassy A 1 0.30
Budgeted fixed manufacturing overhead $ 1,600,000 Std. Student Subassy B 2 0.40
Budgeted variable manufacturing overhead $ 1,920,000 Std. Complete Subassy C 3 0.25
Total budgeted manufacturing overhead $ 3,520,000 Std. Total per WW
Budgeted WW Production Units 136,000
Beginning inventories = -0- Budgeted std hours
Actual Given Actual. Rate per hour 266,000 Actual hrs. - given
Actual fixed manufacturing overhead $ 1,672,000 Act. Student $ 1,672,000
Actual variable manufacturing overhead $ 2,085,000 Act. Complete $ 2,085,000
Total Actual manufacturing overhead $ 3,757,000 Act. $ 3,757,000
Product: 4.0 Wiggle-wagger [WW]
Materials
Qty per WW
1 Subassy A in each WW there is one subassy. A
2 Subassy B in each WW there re 2 subassy. B
3 Subassy C in each WW there are subassy. C
Bill of material for WW:
Subassy. Actual
Qty in ea. Qty per the Purchase Purchase Purchased
WWê Qty in Ea. Subassy Material Raw Material Std cost ea. Actual cost Ea. Qty.
1 Subassy A 4 M1 M1 $ 1.00 $ 0.99 1,420,000
1 2 M2 M2 $ 1.25 $ 1.41 1,200,000
1 3 M3 M3 $ 2.00 $ 2.40 425,000
2 Subassy B 5 M4 M4 $ 3.00 $ 2.98 1,450,000
3 Subassy C 2 M1
3 2 M2 Actual
Qty STD
Used Qty
in for
Production Production total units
1,420,000 M1
1,200,000 M2 Student
425,000 M3 Complete
1,450,000 M4
Product: 4.0 Wiggle-wagger [WW]
Labor
Subassy.Qty per WW Standard labor rate per hour Actual labor rate
1 Subassy A $ 13.60 $ 14.00
2 Subassy B ie., there are 2 Subassy B in ech WW
3 Subassy C
STD
per Subassy. Std. Qty/Hrs.
Bill of material for: Std. Hrs. each for
Qty in Ea. Subassy Labor Production
Subassy A 1 0.30
Subassy B 2 0.40 Student
Subassy C 3 0.25 Complete
Total:
Total actual labor hours: 266,000 given
Total Actual labor spending:
Student To DO
a fill in blanks above
b Materials: determine Material Price [{Purchase price] variance AND Materials Quantity [Usage] variance
c Labor: determine Labor Price [Rate]] variance AND Labor Quantity [Efficiency] variance
d Variable overhead [VOH] :determine VOH Price [Rate]] variance AND VOH Quantity [Efficiency] variance
use hours as denominator for rate per hour
Show calculations

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