Term
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Definition
| Benchmark for measuring performance |
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Term
| Standard quantity per unit |
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Definition
| the amount of direct materials that should be used for each unit of finished products |
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Term
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Definition
| price that should be paid for each unit of direct materials |
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Term
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Definition
| amount of direct labor time that should be required to complete a single unit of product |
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Term
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Definition
| labor rate that should be incurred per hour of labor time |
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Term
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Definition
| = (the actual price - the standard price) X result by actual quantity of input |
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Term
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Definition
| = (actual quantity of input used - amount of input that should have been used) X standard price of input |
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Term
| why are price and quantity variance separate |
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Definition
| because they usually have different causes |
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Term
| Standard quantity allowed |
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Definition
amount of DM that should have been used to complete the period actual output
= actual output X standard quantity per unit |
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Term
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Definition
time that should have been taken to complete the period output
= units produced X standard hours per unit |
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Term
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Definition
| = (direct material's actual price per unit - standard price per unit) X quantity purchased |
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Term
| Materials quantity variance |
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Definition
| = (actual quantity of materials used - standard quantity allowed) X standard price per unit |
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Term
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Definition
= ( actual hourly labor rate - standard rate) X number of hours worked
= AH(AR-SR) |
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Term
| Labor efficiency variance |
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Definition
| = (actual labor hours - standard hours allowed) X standard hourly rate |
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Term
| Variable overhead rate variance |
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Definition
| = actual variable OH cost - standard costs incurred based on actual activity |
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Term
| Variable overhead efficiency variance |
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Definition
| = (actual level of activity - standard activity allowed) X variable part of predetermined OH rate |
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Term
| poor supervision can cause |
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Definition
| unfavorable labor efficiency variance |
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Term
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Definition
| difference between amount of an input and the amount that should have been used |
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Term
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Definition
| actual results - flexible budget amount |
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Term
| if the actual level of activity is greater than the planned level of activity |
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Definition
| the activity variance will be unfavorable |
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Term
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Definition
-F, if Actual < Standard
-U, if Actual > Standard |
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Term
| Standard Cost allowed is favorable |
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Definition
when standard cost allowed for actual output
<
standard cost allowed for planned output |
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Term
| Causes of Unfavorable labor efficiency variance |
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Definition
| Production managers or(and) purchasing managers |
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Term
| if managers do not adjust the workforce in response to changes in workload |
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Definition
| the direct labor workforce becomes a fixed rate in the short run |
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Term
| Direct materials quantity variance |
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Definition
F, if AQ < SQ
U, if AQ > SQ |
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Term
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Definition
| shows the standard quantity and standard price of the inputs required to produce a unit of a specific product |
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