lecture 6.ppt

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1、1LECTURE6A.STANDARDCOSTING–OVERHEADSB.DISPOSITIONOFVARIANCES2A.STANDARDCOSTING-OHTopicintroducedby:(1)ComparingstandardcostingvariancesforOHwithvariancesforDM,DL(2)ComparingOHunderstandardcostingwithOHundernormalcosting31.STDCOSTING–OHCOMPAREDWITHDM,DL41.1COMPAREWITHLASTWEEK’sLECTURE5Pricevarian

2、ces–forbothfixedandvariableOH(MeaningsameasforDM,DL)Efficiencyvariances–forvariableOHonly(MeaningsameasforDM,DL)Additional–fixedOHvolumevariance61.2DEFINITIONSOHprice(spending)–occurswhenfirmspendsmoreorlessonOHforunitsproducedthanitplannedVariableOHefficiency–Machinehoursusedforunitsproducedwas

3、more/fewerthanbudgeted7FixedOHvolumevarianceOccurswhenactual≠budgetedproductionF–produced>budgetU–produced

4、rateledgeraccountforFandV?Settingout….(comparewithTEXT)92.OVERHEAD—NORMALANDSTANDARDCOSTINGCOMPAREDWhatisthesame?Whatisdifferent?102.1ITEMSTHESAME112.1ITEMSTHESAMEActualOHincurredAlwaysondebitsideofOHa/c12ThebudgetedOHrateisalways:budOH(staticlevel)bud(static)activitylevel13OHapplied:AlwaysWIPDR

5、OHCRVariances:Calculateunder/over-appliedOHasbeforeUnder/overappliedisthedifferencebetweenactualandappliedOH14Dispositionofvariances:Mustdisposeofunder/overappliedOHatyearend15162.2DIFFERENCES?OHapplied:ACCOUNTSsame,AMOUNTSdifferent17COSTINGSYSTEMAMOUNTFORJOURNALENTRYNormalactualactivity(whichma

6、ybeactualDLhoursworked;actualmachinehours;actualDLcostetcdependingonthebasechosenbythefirm)multipliedbythebudgetedOHrate.Standardstandardmachinehours,(orDLhours,orDLcostetc)multipliedbythebudgetedOHrate.18Variances:Amountofunder/overappliedUnder/over-appliedsplitfurtherLedgeraccountsrequiredforO

7、HvariancesDispositionofvariances:All8variancea/cstobeclosedAnotheralternativetotransferringtoCOGS.19203.OVERHEADVARIANCES3.1VARIANCEREPORTREVIEWED2122Thisweek,OHvariancesonlyVolume–becauseoutputwasnot60,000units.Costvariance