cima c1 unit 7 2012(1)
TRANSCRIPT
-
7/23/2019 CIMA C1 Unit 7 2012(1)
1/31
-
7/23/2019 CIMA C1 Unit 7 2012(1)
2/31
CIMA C1Fundamentals Of Management Accounting
Standard Costing & Variance Analysis
-
7/23/2019 CIMA C1 Unit 7 2012(1)
3/31
CIMA C1Fundamentals Of Management Accounting
Class Slides Ian Wilson
-
7/23/2019 CIMA C1 Unit 7 2012(1)
4/31
-
7/23/2019 CIMA C1 Unit 7 2012(1)
5/31
1. E!lain t"e #ene$t of setting a #enc"mar%standard
. Calculate standard costs for
Materials'(a#our & Varia#le O)er"eads*. Calculate Variances for
Materials'(a#our'Varia#le O)er"eads &Sales
+. ,re!are -econciliation Statements#eteen #udgeted & actual contri#utions
Learning Aims (CIMA)
-
7/23/2019 CIMA C1 Unit 7 2012(1)
6/31
What do we need to cover/0y!es of Standards Standard Cost Cards
Variances O!erating Statements Causes of Variances Marginal o!erating statements
Introduction
-
7/23/2019 CIMA C1 Unit 7 2012(1)
7/31
What is a Standard Cost?. A unit'#atc" cost !re!ared in ad)ance
#ased on e!ected resource usage and
cost o!erating under !re2determinedconditions. A standard ill include 3standard4 amounts
of (a#our'Material & 5udgeted ,roduction
O)er"eads
Standard Costs
-
7/23/2019 CIMA C1 Unit 7 2012(1)
8/31
Standards are used to measure AC06A(acti)ity & !erformance against t"is !re2determined 5E7C8MA-9
0"e di:erence is called a VA-IA7CE.
Standard Costs
-
7/23/2019 CIMA C1 Unit 7 2012(1)
9/31
See !age ;< of your notes to see "at aStandard Cost Card loo%s li%e
I li%en a 3standard cost card4 to a 3reci!e4 ora 3menu4 of costs.
,ay attention to t"e )arious su#2totals
Consider t"e net slide also
Standard Cost Card
-
7/23/2019 CIMA C1 Unit 7 2012(1)
10/31
S0A7=A-= COS0 CA-= Sam!lelayout
-
7/23/2019 CIMA C1 Unit 7 2012(1)
11/31
There are 4 t!es o" Standard Cost>
1. IdealStandard
. CurrentStandard
*. E!ected'Attaina#leStandard+. 5asicStandard.Ma%e sure you %no eac" one in detail..See !age ;*
T!es o" Standard
-
7/23/2019 CIMA C1 Unit 7 2012(1)
12/31
0"e 3!erfect4 standard. 1
-
7/23/2019 CIMA C1 Unit 7 2012(1)
13/31
Attaina$#e or %&!ected Standard. Standards t"at are set a#o)e current norms0"e degree of im!ro)ement is 3attaina#le4
o)er current !erformance. Firm #ut fair C"allenging you "a)e to seat to ac"ie)e Moti)ational for sta:
Attaina$#e Standard
-
7/23/2019 CIMA C1 Unit 7 2012(1)
14/31
As t"e name suggests "at is currently#eing ac"ie)ed good or #ad
6sed as a #enc"mar% to measureim!ro)ement
May not !ro)ide any ins!iration forim!ro)ement or maintaining "ig" standardsof !erformance
(imited use #ut good 3#enc"mar%4 to assescurrent !erformance
Current Standard
-
7/23/2019 CIMA C1 Unit 7 2012(1)
15/31
8istoric ac"ie)ement not u!dated ,ro)ides a reference !oint to measure
!rogress from
Often t"e launc" standard if it as good atlaunc" !ro)ides a reminder & focus of t"eoriginal cost #ase & Busti$cation for t"eoriginal decisions ta%en
'asic Standard
-
7/23/2019 CIMA C1 Unit 7 2012(1)
16/31
Calculate a 3Standard Cost Card4 for t"iseercise
our notes "a)e a !ro2forma layouta)aila#le to you
,age ;1 Com!lete
%&ercise 1
-
7/23/2019 CIMA C1 Unit 7 2012(1)
17/31
What is a ariance/. 3=i:erence #eteen a !lanned #udgetedor
standard cost and t"e actual cost incurred.0"e same com!arison can #e made forre)enues4.
0"e analysis of t"ese 3di:erences4 is called
VA-IA7CE A7A(SIS.
ariance arianceAna#sis
-
7/23/2019 CIMA C1 Unit 7 2012(1)
18/31
T!es o" ariances>
1. FAVO6-A5(E VA-IA7CES> "en actualresults are #etter t"an e!ected!roducing "ig"er !ro$ts.
. A=VE-SE VA-IA7CES> "en actual resultsare orse t"an e!ected !roducing loert"an !lanned !ro$ts.
ariance arianceAna#sis
-
7/23/2019 CIMA C1 Unit 7 2012(1)
19/31
Material
(a#our
Varia#le O)er"eads
Sales
,rice 6sage
-ate E@ciency
E!enditure E@ciency
,rice Volume ,ro$t
Family 0ree of Variances
-
7/23/2019 CIMA C1 Unit 7 2012(1)
20/31
Formula met"od uses 9ey ,"rases t"at needDuanti$cation>
A or A8G H Actual uantity of material
A, or A-G H Actual ,rice !aid for material S, or S-G H Standard ,rice of material !er
unit of material S or S8G H Standard uantity of material
!er unit AC06A( O60,60 6A70I0 A A, S S, e)ol)es to> A8 A- S8 S-for (a#our
ariances * The +e
-
7/23/2019 CIMA C1 Unit 7 2012(1)
21/31
Materia# ariances
-
7/23/2019 CIMA C1 Unit 7 2012(1)
22/31
La$our ariances
-
7/23/2019 CIMA C1 Unit 7 2012(1)
23/31
aria$#e ,verheadariances
-
7/23/2019 CIMA C1 Unit 7 2012(1)
24/31
SAL%S A-IAC%S
Actual sales Actual !rice
H ,rice )ariance
Actual sales Standard !rice
Actual sales Standard !ro$t margin
H Volume Variance
5udgeted sales Standard !ro$t margin
Sa#es ariances
-
7/23/2019 CIMA C1 Unit 7 2012(1)
25/31
0"is is a great !ractice Duestion.ou "a)e to calculate A((!ossi#le
VA-IA7CES
)ariances in total are reDuired Consider t"e Duestion layout carefully>
1. 0o! section A((your S0A7=A-=Saregi)en "ere>
. 5ottom !art of Duestion usually "ere t"eAC06A(data is found
%&am!#e / ,wen
-
7/23/2019 CIMA C1 Unit 7 2012(1)
26/31
,!erating Statement
-
7/23/2019 CIMA C1 Unit 7 2012(1)
27/31
,!erating Statement
-
7/23/2019 CIMA C1 Unit 7 2012(1)
28/31
,ut toget"er an O!erating Statement #asedon MA-JI7A( costing !rinci!les
%&am!#e 0 ,wen
-
7/23/2019 CIMA C1 Unit 7 2012(1)
29/31
-easons "or Materia# ariances
-
7/23/2019 CIMA C1 Unit 7 2012(1)
30/31
-easons "or La$ourariances
-
7/23/2019 CIMA C1 Unit 7 2012(1)
31/31
%2cienc ariances> As !er (a#our E@ciency reasons> %&!enditure ariances>
Varia#le o)er"eads ill #e made u! of a)ariety of di:erent costs. Eac" cost element ill "a)e to #e t"e
su#Bect of analysis #ased on actual &
!lanned e!enditure to ascertainfa)oura#le'ad)erse reasons for a )ariance
-easons "or varia$#e ,verheadariances