Acct II-Ch 24

16 terms by occc0708 

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Controllable Variance

refers to activities usually under management control; by combining the variable overhead spending variance, the fixed overhead variance, and the variable overhead efficiency variance

Cost Variance

the difference between actual and standard costs; also called a variance

Efficiency Variance

when standard direct labor hours expected for actual production differ from the actual direct labor hours used

Favorable Variance

when actual revenue is higher than budgeted revenue, or actual cost is lower than budgeted cost; when the actual cost or revenue contributes to a higher income

Overhead Cost Variance

the difference between the total overhead cost applied to products and the total overhead cost actually incurred

Price Variance

the difference between actual price per unit of input and budgeted price per unit of input

Rate Variance

A variance arising in a standard costing system that indicates the difference between the standard cost of direct labor for the good output (standard hours times standard rate) and the standard cost of the actual hours of direct labor used (actual hours times standard rate)

Quantity Variance

the difference between actual quantity of input used and budgeted quantity of input

Spending Variance

occurs when management pays an amount different than the standard price to acquire an item

Unfavorable Variance

the amount by which actual costs exceed the standard costs or budgeted costs; also, the amount by which actual revenues are less than the budgeted revenues

Volume Variance

occurs when a difference occurs between the actual volume of production and the standard volume of production; a variance arising in a standard costing system that indicates the difference between the standard amount of fixed manufacturing overhead for the good units produced (standard hours times standard rate) and the budgeted amount of fixed manufacturing overhead

Standard Cost

a preset cost for delivering a product or service under normal conditions

Variance Analysis

A process of examining the differences between actual and budgeted sales or costs and describing them in terms of the amounts that resulted from price and quantity differences is called

Analysis of variances is best accomplished by using a

comparison of actual data to both fixed and flexible budget data

Flexible Budget Performance Report

An internal report that helps management analyze the difference between actual performance and budgeted performance based on actual sales volume or other activity and which presents the differences between actual and budgeted amounts as variances is called

Regarding company overhead costs, as volume increases

Unit fixed costs decrease, unit variable costs remain constant

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