indirect cost variances and resource capacity management

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1、Rev.ConfirmingPagesCHAPTERFIFTEENOperationalPerformanceMeasurement:Indirect-CostVariancesandResource-CapacityManagementAfterstudyingthischapter,youshouldbeableto...1.Distinguishbetweentheproduct-costingandcontrolpurposesofstandardcostsformanufacturingoverhead2.Calculateandproperlyinterpre

2、tstandardcostvariancesformanufacturingoverheadusingflexiblebudgets3.Recordoverheadcostsandassociatedstandardcostvariances4.Applystandardcoststoserviceorganizations5.Analyzeoverheadvariancesinanactivity-basedcost(ABC)system6.Understanddecisionrulesthatcanbeusedtoguidethevariance-investigat

3、iondecision“ThethirdquarterwasadifficultperiodforUnited.Revenueperformancesufferedsig-nificantlyfromtheoperationaldisruptionsweexperiencedthroughoutthequarter,”JamesGoodwin,UnitedAirlineschairmanandchiefexecutive,said.1United(UAL)sufferedfromthousandsoflaborandweather-relatedflightcancell

4、ationsanddelaysduringthethirdquarterof2000whiletheairlinenegotiatedalaborcontractwithitspilots.Theearningspershareforthequarterdecreasedfromaprofitof$2.89thepreviousyeartoalossof$1.29.UAL’soperatingresultsexperiencedthisdrasticchangealthoughthedecreaseintrafficwasonlyasmallpercentageoftot

5、altrafficduringthethirdquarterof2000.Asitisforothercompanieswithhighfixedcosts(i.e.,highdegreesofoperatingleverage),volumeisacriti-calsuccessfactorforUAL.FluctuationsintrafficvolumeatUALoftenexplainthebulkofchangesinoperatingresults.UALconstantlymonitorsvolume-variancedata,whichmeasuresth

6、eeffectonoperatingresultsofdifferencesbetweenactualvolume(passengermiles)andbudgetedvolume.Companieswithhighfixedcostsexperiencewidevariationsinoperatingresultsinresponsetochangesinoutputvolume.Managersoftheseorganizationsmonitorbusinessvolumescloselyandattempttoreducefluctuationsinbusine

7、ssactivities.ContinuingthediscussionfromChapter14,inthischapterweexamineproductionvolumeandotherindirect-costvari-ancesthatorganizationsusetomonitorshort-termfinancialperformance.Weexpandthedis-cussionofstandardcosts,flexiblebudgets,andvarianceanalysisandapplythesec