standard costs and the balanced scorecard · first, they point to causes of problems and directions...
TRANSCRIPT
Standard Costs and The Balanced Scorecard
Chapter
10
© McGraw-Hill Ryerson Limited., 2001
10-2
LEARNING OBJECTIVES
1. Explain how direct materials standards anddirect labour standards are set.
2. Compute the direct materials price and quantityvariances and explain their significance.
3. Compute mix and yield variances for materialsand explain their significance.
4. Compute the direct labour rate and efficiencyvariances and explain their significance.
5. Compute the variable manufacturing overheadspending and efficiency variances.
After studying this chapter, you should be able to:
© McGraw-Hill Ryerson Limited., 2001
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LEARNING OBJECTIVES
6. Understand the advantages of and the potentialproblems with using standard costs.
7. Understand how a balanced scorecard fitstogether and how it supports a company’sstrategy.
8. Compute the delivery cycle time, the throughputtime and the manufacturing cycle efficiency(MCE).
9. (Appendix 10A) Prepare journal entries to recordstandard costs and variances.
10. (Appendix 10B) Explain the value of learningcurves.
After studying this chapter, you should be able to:
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Standard Costs
benchmarks formeasuring performance.
the expected levelof performance.
based on carefullypredetermined amounts.
used for planning labour, materialand overhead requirements.Standard
Costs are:
© McGraw-Hill Ryerson Limited., 2001
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Standard Costs
DirectMaterial
Managers focus on quantities and coststhat exceed standards, a practice known as
management by exception.
Type of Product Cost
Am
ou
nt
DirectLabour
ManufacturingOverhead
Standard
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Accountants, engineers, personneladministrators, and production managerscombine efforts to set standards based on
experience and expectations.
Setting Standard Costs
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Setting Standard Costs
Should we usepractical standardsor ideal standards?
Engineer ManagerialAccountant
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Setting Standard CostsPractical standards
should be set at levelsthat are currently
attainable withreasonable andefficient effort.
Productionmanager Managerial
Accountant
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Setting Standard CostsI agree. Ideal standards,
that are based onperfection, are
unattainable anddiscourage most
employees.
HumanResourcesManager
ManagerialAccountant
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Setting Direct Material Standards
QuantityStandards
Use productdesign specifications.
PriceStandards
Final, deliveredcost of materials,net of discounts.
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Setting Direct Labour Standards
RateStandards
Use wage surveys and
labour contracts.
TimeStandards
Use time andmotion studies for
each labour operation.
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Setting Variable OverheadStandards
RateStandards
The rate is the variable portion of the
predetermined overhead rate.
ActivityStandards
The activity is the base used to calculate
the predeterminedoverhead.
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Standard Cost Card – VariableProduction Cost
A standard cost card for one unit ofproduct might look like this:
A A x BStandard Standard StandardQuantity Price Cost
Inputs or Hours or Rate per Unit
Direct materials 3.0 kg. 4.00$ per kg. 12.00$ Direct labour 2.5 hours 14.00 per hour 35.00 Variable mfg. overhead 2.5 hours 3.00 per hour 7.50 Total standard unit cost 54.50$
B
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Are standards thesame as budgets?
A standard is theexpected cost for one
unit.
A budget is theexpected cost for all
units.
Standards vs. Budgets
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Standard Cost VariancesP
rod
uc
t C
os
t
Standard
This variance is unfavourablebecause the actual cost
exceeds the standard cost.
A standard cost variance is the amount by whichan actual cost differs from the standard cost.
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Standard Cost Variances
I see that thereis an
unfavourablevariance.
But why arevariances
important to me?
First, they point to causes ofproblems and directions
for improvement.
Second, they trigger investigations in departments
having responsibility for incurring the costs.
© McGraw-Hill Ryerson Limited., 2001
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Variance Analysis Cycle
Prepare standardcost performance
report
Conduct nextperiod’s
operations
Analyzevariances
Identifyquestions
Receiveexplanations
Takecorrective
actions
Begin
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Standard Cost Variances
Price Variance
The difference betweenthe actual price and the
standard price
Standard Cost Variances
Quantity Variance
The difference betweenthe actual quantity andthe standard quantity
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A General Model for VarianceAnalysis
Actual Quantity Actual Quantity Standard Quantity × × × Actual Price Standard Price Standard Price
Price Variance Quantity Variance
Standard price is the amount that shouldhave been paid for the resources acquired.
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Price Variance Quantity Variance
Actual Quantity Actual Quantity Standard Quantity × × × Actual Price Standard Price Standard Price
A General Model for VarianceAnalysis
Standard quantity is the quantity allowed forthe actual good output.
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A General Model for VarianceAnalysis
AQ(AP - SP) SP(AQ - SQ)
AQ = Actual Quantity SP = Standard Price AP = Actual Price SQ = Standard Quantity
Price Variance Quantity Variance
Actual Quantity Actual Quantity Standard Quantity × × × Actual Price Standard Price Standard Price
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Standard Costs
Let’s use thegeneral model to
calculate standardcost variances,
starting withdirect material.
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Hanson Inc. has the following direct materialstandard to manufacture one Zippy:
1.5 kilograms per Zippy at $4.00 per kilogram
Last week 1,700 kilograms of material werepurchased and used to make 1,000 Zippies.
The material cost a total of $6,630.
Material Variances Example Zippy
© McGraw-Hill Ryerson Limited., 2001
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What is the actual price per kilogrampaid for the material?
a. $4.00 per kilogram.
b. $4.10 per kilogram.
c. $3.90 per kilogram.
d. $6.63 per kilogram.
What is the actual price per kilogrampaid for the material?
a. $4.00 per kilogram.
b. $4.10 per kilogram.
c. $3.90 per kilogram.
d. $6.63 per kilogram.
Material Variances Zippy
© McGraw-Hill Ryerson Limited., 2001
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What is the actual price per kilogrampaid for the material?
a. $4.00 per kilogram.
b. $4.10 per kilogram.
c. $3.90 per kilogram.
d. $6.63 per kilogram.
What is the actual price per kilogrampaid for the material?
a. $4.00 per kilogram.
b. $4.10 per kilogram.
c. $3.90 per kilogram.
d. $6.63 per kilogram.AP = $6,630 ÷ 1,700 kg.AP = $3.90 per kg.
Material Variances Zippy
© McGraw-Hill Ryerson Limited., 2001
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Hanson’s material price variance (MPV)for the week was:
a. $170 unfavourable.
b. $170 favourable.
c. $800 unfavourable.
d. $800 favourable.
Hanson’s material price variance (MPV)for the week was:
a. $170 unfavourable.
b. $170 favourable.
c. $800 unfavourable.
d. $800 favourable.
Material Variances Zippy
© McGraw-Hill Ryerson Limited., 2001
10-27
Hanson’s material price variance (MPV)for the week was:
a. $170 unfavourable.
b. $170 favourable.
c. $800 unfavourable.
d. $800 favourable.
Hanson’s material price variance (MPV)for the week was:
a. $170 unfavourable.
b. $170 favourable.
c. $800 unfavourable.
d. $800 favourable. MPV = AQ(AP - SP) MPV = 1,700 kg. × ($3.90 - 4.00) MPV = $170 Favourable
Material Variances Zippy
© McGraw-Hill Ryerson Limited., 2001
10-28
The standard quantity of material thatshould have been used to produce1,000 Zippies is:
a. 1,700 kilograms.
b. 1,500 kilograms.
c. 2,550 kilograms.
d. 2,000 kilograms.
The standard quantity of material thatshould have been used to produce1,000 Zippies is:
a. 1,700 kilograms.
b. 1,500 kilograms.
c. 2,550 kilograms.
d. 2,000 kilograms.
Material Variances Zippy
© McGraw-Hill Ryerson Limited., 2001
10-29
The standard quantity of material thatshould have been used to produce1,000 Zippies is:
a. 1,700 kilograms.
b. 1,500 kilograms.
c. 2,550 kilograms.
d. 2,000 kilograms.
The standard quantity of material thatshould have been used to produce1,000 Zippies is:
a. 1,700 kilograms.
b. 1,500 kilograms.
c. 2,550 kilograms.
d. 2,000 kilograms. SQ = 1,000 units × 1.5 kg per unit SQ = 1,500 kg
Material Variances Zippy
© McGraw-Hill Ryerson Limited., 2001
10-30
Hanson’s material quantity variance (MQV)for the week was:
a. $170 unfavourable.
b. $170 favourable.
c. $800 unfavourable.
d. $800 favourable.
Hanson’s material quantity variance (MQV)for the week was:
a. $170 unfavourable.
b. $170 favourable.
c. $800 unfavourable.
d. $800 favourable.
Material Variances Zippy
© McGraw-Hill Ryerson Limited., 2001
10-31
Hanson’s material quantity variance (MQV)for the week was:
a. $170 unfavourable.
b. $170 favourable.
c. $800 unfavourable.
d. $800 favourable.
Hanson’s material quantity variance (MQV)for the week was:
a. $170 unfavourable.
b. $170 favourable.
c. $800 unfavourable.
d. $800 favourable. MQV = SP(AQ - SQ) MQV = $4.00(1,700 kg - 1,500 kg) MQV = $800 unfavourable
Material Variances Zippy
© McGraw-Hill Ryerson Limited., 2001
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1,700 kg. 1,700 kg. 1,500 kg. × × × $3.90 per kg. $4.00 per kg. $4.00 per kg.
= $6,630 = $ 6,800 = $6,000
Price variance$170 favourable
Quantity variance$800 unfavourable
Actual Quantity Actual Quantity Standard Quantity × × × Actual Price Standard Price Standard Price
Material Variances Summary Zippy
© McGraw-Hill Ryerson Limited., 2001
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Material Variances
Hanson purchased andused 1,700 kilograms.How are the variances
computed if the amountpurchased differs from
the amount used?
The price variance iscomputed on the entire
quantity purchased.
The quantity variance iscomputed only on the
quantity used.
© McGraw-Hill Ryerson Limited., 2001
10-34
Hanson Inc. has the following materialstandard to manufacture one Zippy:
1.5 kilograms per Zippy at $4.00 per kilogram
Last week 2,800 kilograms of material werepurchased at a total cost of $10,920, and1,700 kilograms were used to make 1,000
Zippies.
Material Variances ContinuedZippy
© McGraw-Hill Ryerson Limited., 2001
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Actual Quantity Actual Quantity Purchased Purchased × × Actual Price Standard Price
2,800 kg. 2,800 kg. × × $3.90 per kg. $4.00 per kg.
= $10,920 = $11,200
Price variance$280 favourable
Price variance increasesbecause quantity
purchased increases.
Material Variances ContinuedZippy
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Actual Quantity Used Standard Quantity × × Standard Price Standard Price
1,700 kg. 1,500 kg. × × $4.00 per kg. $4.00 per kg.
= $6,800 = $6,000
Quantity variance$800 unfavourable
Quantity variance isunchanged becauseactual and standard
quantities are unchanged.
Material Variances ContinuedZippy
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Isolation of Material Variances
I need the price variancesooner so that I can better
identify purchasing problems.
You accountants just don’tunderstand the problems thatpurchasing managers have.
I’ll start computingthe price variancewhen material is
purchased rather thanwhen it’s used.
© McGraw-Hill Ryerson Limited., 2001
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Responsibility for MaterialVariances
I am not responsible for this unfavourable material
quantity variance.
You purchased cheapmaterial, so my peoplehad to use more of it.
You used too much materialbecause of poorly trained
workers and poorlymaintained equipment.
Also, your poor schedulingsometimes requires me to
rush order material at ahigher price, causing
unfavourable price variances.
© McGraw-Hill Ryerson Limited., 2001
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Standard Costs
Now let’s calculatestandard costvariances fordirect labour.
© McGraw-Hill Ryerson Limited., 2001
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Hanson Inc. has the following direct labourstandard to manufacture one Zippy:
1.5 standard hours per Zippy at $6.00 perdirect labour hour
Last week 1,550 direct labour hours wereworked at a total labour cost of $9,610 to
make 1,000 Zippies.
Labour Variances Example Zippy
© McGraw-Hill Ryerson Limited., 2001
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What was Hanson’s actual rate (AR)for labour for the week?
a. $6.20 per hour.
b. $6.00 per hour.
c. $5.80 per hour.
d. $5.60 per hour.
What was Hanson’s actual rate (AR)for labour for the week?
a. $6.20 per hour.
b. $6.00 per hour.
c. $5.80 per hour.
d. $5.60 per hour.
Labour Variances Zippy
© McGraw-Hill Ryerson Limited., 2001
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What was Hanson’s actual rate (AR)for labour for the week?
a. $6.20 per hour.
b. $6.00 per hour.
c. $5.80 per hour.
d. $5.60 per hour.
What was Hanson’s actual rate (AR)for labour for the week?
a. $6.20 per hour.
b. $6.00 per hour.
c. $5.80 per hour.
d. $5.60 per hour.
Labour Variances
AR = $9,610 ÷ 1,550 hours AR = $6.20 per hour
Zippy
© McGraw-Hill Ryerson Limited., 2001
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Hanson’s labour rate variance (LRV) forthe week was:
a. $310 unfavourable.
b. $310 favourable.
c. $300 unfavourable.
d. $300 favourable.
Hanson’s labour rate variance (LRV) forthe week was:
a. $310 unfavourable.
b. $310 favourable.
c. $300 unfavourable.
d. $300 favourable.
Labour Variances Zippy
© McGraw-Hill Ryerson Limited., 2001
10-44
Hanson’s labour rate variance (LRV) forthe week was:
a. $310 unfavourable.
b. $310 favourable.
c. $300 unfavourable.
d. $300 favourable.
Hanson’s labour rate variance (LRV) forthe week was:
a. $310 unfavourable.
b. $310 favourable.
c. $300 unfavourable.
d. $300 favourable.
Labour Variances
LRV = AH(AR - SR) LRV = 1,550 hrs($6.20 - $6.00) LRV = $310 unfavourable
Zippy
© McGraw-Hill Ryerson Limited., 2001
10-45
The standard hours (SH) of labour thatshould have been worked to produce1,000 Zippies is:
a. 1,550 hours.
b. 1,500 hours.
c. 1,700 hours.
d. 1,800 hours.
The standard hours (SH) of labour thatshould have been worked to produce1,000 Zippies is:
a. 1,550 hours.
b. 1,500 hours.
c. 1,700 hours.
d. 1,800 hours.
Labour Variances Zippy
© McGraw-Hill Ryerson Limited., 2001
10-46
The standard hours (SH) of labour thatshould have been worked to produce1,000 Zippies is:
a. 1,550 hours.
b. 1,500 hours.
c. 1,700 hours.
d. 1,800 hours.
The standard hours (SH) of labour thatshould have been worked to produce1,000 Zippies is:
a. 1,550 hours.
b. 1,500 hours.
c. 1,700 hours.
d. 1,800 hours.
Labour Variances
SH = 1,000 units × 1.5 hours per unit SH = 1,500 hours
Zippy
© McGraw-Hill Ryerson Limited., 2001
10-47
Hanson’s labour efficiency variance (LEV)for the week was:
a. $290 unfavourable.
b. $290 favourable.
c. $300 unfavourable.
d. $300 favourable.
Hanson’s labour efficiency variance (LEV)for the week was:
a. $290 unfavourable.
b. $290 favourable.
c. $300 unfavourable.
d. $300 favourable.
Labour Variances Zippy
© McGraw-Hill Ryerson Limited., 2001
10-48
Hanson’s labour efficiency variance (LEV)for the week was:
a. $290 unfavourable.
b. $290 favourable.
c. $300 unfavourable.
d. $300 favourable.
Hanson’s labour efficiency variance (LEV)for the week was:
a. $290 unfavourable.
b. $290 favourable.
c. $300 unfavourable.
d. $300 favourable.
Labour Variances
LEV = SR(AH - SH) LEV = $6.00(1,550 hrs - 1,500 hrs) LEV = $300 unfavourable
Zippy
© McGraw-Hill Ryerson Limited., 2001
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Actual Hours Actual Hours Standard Hours × × × Actual Rate Standard Rate Standard Rate
Labour Variances Summary
Rate variance$310 unfavourable
Efficiency variance$300 unfavourable
1,550 hours 1,550 hours 1,500 hours × × × $6.20 per hour $6.00 per hour $6.00 per hour
= $9,610 = $9,300 = $9,000
Zippy
© McGraw-Hill Ryerson Limited., 2001
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Labour Rate Variance –A Closer Look
High skill,high rate
Low skill,low rate
Using highly paid skilled workers toperform unskilled tasks results in an
unfavourable rate variance.
Production managers who make work assignmentsare generally responsible for rate variances.
Production managers who make work assignmentsare generally responsible for rate variances.
© McGraw-Hill Ryerson Limited., 2001
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Labour Efficiency Variance –A Closer Look
UnfavourableEfficiencyVariance
Poorlytrainedworkers
Poorquality
materials
Poorlymaintainedequipment
Poorsupervisionof workers
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Responsibility for LabourVariances
I am not responsible for the unfavourable labour
efficiency variance!
You purchased cheapmaterial, so it took more
time to process it.
You used too muchtime because of poorly
trained workers andpoor supervision.
© McGraw-Hill Ryerson Limited., 2001
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Responsibility for LabourVariances
Maybe I can attribute the labourand material variances to personnel
for hiring the wrong peopleand training them poorly.
© McGraw-Hill Ryerson Limited., 2001
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Standard Costs
Now let’s calculatestandard cost
variances for thelast of the variableproduction costs –
variablemanufacturing
overhead.
© McGraw-Hill Ryerson Limited., 2001
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Hanson Inc. has the following variablemanufacturing overhead standard to
manufacture one Zippy:
1.5 standard hours per Zippy at $3.00 perdirect labour hour
Last week 1,550 hours were worked to make1,000 Zippies, and $5,115 was spent for
variable manufacturing overhead.
Variable ManufacturingOverhead Variances Example Zippy
© McGraw-Hill Ryerson Limited., 2001
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What was Hanson’s actual rate (AR) forvariable manufacturing overhead ratefor the week?
a. $3.00 per hour.
b. $3.19 per hour.
c. $3.30 per hour.
d. $4.50 per hour.
What was Hanson’s actual rate (AR) forvariable manufacturing overhead ratefor the week?
a. $3.00 per hour.
b. $3.19 per hour.
c. $3.30 per hour.
d. $4.50 per hour.
Variable ManufacturingOverhead Variances Zippy
© McGraw-Hill Ryerson Limited., 2001
10-57
What was Hanson’s actual rate (AR) forvariable manufacturing overhead ratefor the week?
a. $3.00 per hour.
b. $3.19 per hour.
c. $3.30 per hour.
d. $4.50 per hour.
What was Hanson’s actual rate (AR) forvariable manufacturing overhead ratefor the week?
a. $3.00 per hour.
b. $3.19 per hour.
c. $3.30 per hour.
d. $4.50 per hour.
Variable ManufacturingOverhead Variances
AR = $5,115 ÷ 1,550 hours AR = $3.30 per hour
Zippy
© McGraw-Hill Ryerson Limited., 2001
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Hanson’s spending variance (SV) forvariable manufacturing overhead forthe week was:
a. $465 unfavourable.
b. $400 favourable.
c. $335 unfavourable.
d. $300 favourable.
Hanson’s spending variance (SV) forvariable manufacturing overhead forthe week was:
a. $465 unfavourable.
b. $400 favourable.
c. $335 unfavourable.
d. $300 favourable.
Variable ManufacturingOverhead Variances Zippy
© McGraw-Hill Ryerson Limited., 2001
10-59
Hanson’s spending variance (SV) forvariable manufacturing overhead forthe week was:
a. $465 unfavourable.
b. $400 favourable.
c. $335 unfavourable.
d. $300 favourable.
Hanson’s spending variance (SV) forvariable manufacturing overhead forthe week was:
a. $465 unfavourable.
b. $400 favourable.
c. $335 unfavourable.
d. $300 favourable.
Variable ManufacturingOverhead Variances
SV = AH(AR - SR) SV = 1,550 hrs($3.30 - $3.00) SV = $465 unfavourable
Zippy
© McGraw-Hill Ryerson Limited., 2001
10-60
Hanson’s efficiency variance (EV) forvariable manufacturing overhead for theweek was:
a. $435 unfavourable.
b. $435 favourable.
c. $150 unfavourable.
d. $150 favourable.
Hanson’s efficiency variance (EV) forvariable manufacturing overhead for theweek was:
a. $435 unfavourable.
b. $435 favourable.
c. $150 unfavourable.
d. $150 favourable.
Variable ManufacturingOverhead Variances Zippy
© McGraw-Hill Ryerson Limited., 2001
10-61
Hanson’s efficiency variance (EV) forvariable manufacturing overhead for theweek was:
a. $435 unfavourable.
b. $435 favourable.
c. $150 unfavourable.
d. $150 favourable.
Hanson’s efficiency variance (EV) forvariable manufacturing overhead for theweek was:
a. $435 unfavourable.
b. $435 favourable.
c. $150 unfavourable.
d. $150 favourable.
Variable ManufacturingOverhead Variances
EV = SR(AH - SH) EV = $3.00(1,550 hrs - 1,500 hrs) EV = $150 unfavourable
1,000 units × 1.5 hrs per unit
Zippy
© McGraw-Hill Ryerson Limited., 2001
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Spending variance$465 unfavourable
Efficiency variance$150 unfavourable
1,550 hours 1,550 hours 1,500 hours × × × $3.30 per hour $3.00 per hour $3.00 per hour
= $5,115 = $4,650 = $4,500
Actual Hours Actual Hours Standard Hours × × × Actual Rate Standard Rate Standard Rate
Variable ManufacturingOverhead Variances Zippy
© McGraw-Hill Ryerson Limited., 2001
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Variable Manufacturing OverheadVariances – A Closer Look
If variable overhead is applied on the basisof direct labour hours, the labour efficiencyand variable overhead efficiency variances
will move in tandem.
If variable overhead is applied on the basisof direct labour hours, the labour efficiencyand variable overhead efficiency variances
will move in tandem.
© McGraw-Hill Ryerson Limited., 2001
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Larger variances, indollar amount or asa percentage of the
standard, areinvestigated first.
Variance Analysis andManagement by Exception
How do I know whichvariances toinvestigate?
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Advantages of Standard Costs
Management byexception
Improved cost control and performance
evaluation
Better Informationfor planning anddecision making
Possible reductionsin production costs
Advantages
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PotentialProblems
Emphasis on negativemay impact morale.
Emphasizing standardsmay exclude other
important objectives.
Favourable variancesmay be misinterpreted.
Continuous improvementmay be more
important thanmeeting standards.
Standard costreports may
not be timely.
Labour quantity standardsand efficiency variancesmay not be appropriate.
© McGraw-Hill Ryerson Limited., 2001
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The Balanced Scorecard
Management translates its strategy intoperformance measures that employees
understand and accept.
Management translates its strategy intoperformance measures that employees
understand and accept.
Performancemeasures
Financial Customers
Learningand growth
Internalbusiness
processes
© McGraw-Hill Ryerson Limited., 2001
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The Balanced Scorecard
How do we lookto the owners?
How can wecontinually learn,
grow, and improve?
In which internalbusiness processes
must we excel?
How do we lookto customers?
© McGraw-Hill Ryerson Limited., 2001
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The Balanced Scorecard
Learning improvesbusiness processes.
Improved businessprocesses improve
customer satisfaction.
Improving customersatisfaction improves
financial results.
© McGraw-Hill Ryerson Limited., 2001
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Process time is the only value-added time.
Delivery Performance Measures
Wait TimeProcess Time + Inspection Time
+ Move Time + Queue Time
OrderReceived
ProductionStarted
GoodsShipped
Delivery Cycle Time
Throughput Time
© McGraw-Hill Ryerson Limited., 2001
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Delivery Performance Measures
ManufacturingCycle
Efficiency
Value-added time
Throughput time=
Wait Time
Throughput Time
Process Time + Inspection Time+ Move Time + Queue Time
OrderReceived
ProductionStarted
GoodsShipped
Delivery Cycle Time
General Ledger Entries toRecord Variances
Appendix
10A
© McGraw-Hill Ryerson Limited., 2001
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Journal Entries - Material Variances✒ Price variance
Dr Raw Materials
Dr Materials Price Variance (U)
Cr Materials Price Variance (F)
Cr Accounts Payable
✒ Quantity varianceDr Work in Process
Dr Materials Quantity Variance (U)
Cr Materials Quantity Variance (F)
Cr Raw Materials
© McGraw-Hill Ryerson Limited., 2001
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Journal Entries - Labour Variances
✒ Rate varianceDr Work in Process
Dr Labour Rate Variance (U)
Cr Labour Rate Variance (F)
Cr Wages Payable
✒ Efficiency varianceDr Work in Process
Dr Labour Efficiency Variance (U)
Cr Labour Efficiency Variance (F)
Cr Wages Payable
The Learning Curve
Appendix
10B
© McGraw-Hill Ryerson Limited., 2001
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The Learning Curve
!Productivity in hours per unit willdecrease as an employee produces moreunits.
!Used to set and revise standard labourhours in a repetitive task environment.
!Used for labour intensive manufacturing.
© McGraw-Hill Ryerson Limited., 2001
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End of Chapter 10