管理会计案例

Standard Costs and Operating Performance Measures Chapter10Standard CostsBenchmarks formeasuring performance.The expected levelof performance.Based on carefullypredetermined amounts.Used for planning labor,materialand overhead requirements.Standard Costs are Standard CostsDirectMaterialManagers focus on quantities and coststhat exceed standards,a practice known as management by exception.Type of Product CostAmountDirectLaborManufacturingOverheadStandard Accountants,engineers,personnel administrators,and production managers combine efforts to set standards based on experience and expectations.Setting Standard CostsSetting Standard CostsShould we usepractical standardsor ideal standards?EngineerManagerialAccountantSetting Standard CostsPractical standardsshould be set at levelsthat are currentlyattainable withreasonable andefficient effort.ProductionmanagerSetting Standard CostsI agree.Ideal standards,that are based on perfection,areunattainable and discourage most employees.HumanResourcesManagerSetting Direct Material Standards QuantityStandardsUse product design specifications.PriceStandardsFinal,deliveredcost of materials,net of discounts.Setting Direct Labor Standards RateStandardsUse wage surveys andlabor contracts.TimeStandardsUse time and motion studies foreach labor operation.RateStandardsThe rate is the variable portion of the predetermined overhead rate.ActivityStandardsThe activity is the base used to calculate the predetermined overhead.Standard Cost Card Variable Production Cost A standard cost card for one unit of product might look like this:AA x BStandardStandardStandardQuantityPriceCostInputsor Hoursor Rateper UnitDirect materials 3.0 lbs.4.00$per lb.12.00$Direct labor 2.5 hours14.00 per hour35.00 Variable mfg.overhead 2.5 hours3.00 per hour7.50 Total standard unit cost54.50$BAre standards the same as budgets?A standard is the expected cost for one unit.A budget is the expected cost for all units.Standards vs.BudgetsProduct CostStandardThis variance is unfavorablebecause the actual costexceeds the standard cost.A standard cost variance is the amount by whichan actual cost differs from the standard cost.Standard Cost VariancesI see that thereis an unfavorable variance.But why arevariances important to me?First,they point to causes ofproblems and directionsfor improvement.Second,they trigger investigations in departments having responsibility for incurring the costs.Variance Analysis CyclePrepare standard cost performance reportConduct next periods operationsAnalyze variancesIdentifyquestionsReceive explanationsTakecorrective actionsBeginStandard Cost VariancesPrice VarianceThe difference betweenthe actual price and thestandard priceStandard Cost VariancesQuantity VarianceThe difference betweenthe actual quantity andthe standard quantityA General Model for Variance Analysis Actual Quantity Actual Quantity Standard Quantity Actual Price Standard Price Standard PricePrice VarianceQuantity VarianceStandard price is the amount that should have been paid for the resources acquired.Price VarianceQuantity Variance Actual Quantity Actual Quantity Standard Quantity Actual Price Standard Price Standard PriceA General Model for Variance Analysis Standard quantity is the quantity allowed for the actual good output.A General Model for Variance Analysis AQ(AP-SP)SP(AQ-SQ)AQ=Actual Quantity SP=Standard Price AP=Actual Price SQ=Standard Quantity Price VarianceQuantity Variance Actual Quantity Actual Quantity Standard Quantity Actual Price Standard Price Standard PriceStandard CostsLets use the general model to calculate standard cost variances,starting withdirect material.Hanson Inc.has the following direct material standard to manufacture one Zippy:1.5 pounds per Zippy at$4.00 per pound Last week 1,700 pounds of material were purchased and used to make 1,000 Zippies.The material cost a total of$6,630.Material Variances ExampleZippy What is the actual price per poundpaid for the material?a.$4.00 per pound.b.$4.10 per pound.c.$3.90 per pound.d.$6.63 per pound.Material VariancesZippy What is the actual price per poundpaid for the material?a.$4.00 per pound.b.$4.10 per pound.c.$3.90 per pound.d.$6.63 per pound.AP=$6,630 1,700 lbs.AP=$3.90 per lb.Material VariancesZippy Hansons material price variance(MPV)for the week was:a.$170 unfavorable.b.$170 favorable.c.$800 unfavorable.d.$800 favorable.Material VariancesZippy Hansons material price variance(MPV)for the week was:a.$170 unfavorable.b.$170 favorable.c.$800 unfavorable.d.$800 favorable.MPV=AQ(AP-SP)MPV=1,700 lbs.($3.90-4.00)MPV=$170 FavorableMaterial VariancesZippy The standard quantity of material thatshould have been used to produce1,000 Zippies is:a.1,700 pounds.b.1,500 pounds.c.2,550 pounds.d.2,000 pounds.Material VariancesZippy The standard quantity of material thatshould have been used to produce1,000 Zippies is:a.1,700 pounds.b.1,500 pounds.c.2,550 pounds.d.2,000 pounds.SQ=1,000 units 1.5 lbs per unit SQ=1,500 lbsMaterial VariancesZippy Hansons material quantity variance(MQV)for the week was:a.$170 unfavorable.b.$170 favorable.c.$800 unfavorable.d.$800 favorable.Material VariancesZippy Hansons material quantity variance(MQV)for the week was:a.$170 unfavorable.b.$170 favorable.c.$800 unfavorable.d.$800 favorable.MQV=SP(AQ-SQ)MQV=$4.00(1,700 lbs-1,500 lbs)MQV=$800 unfavorableMaterial VariancesZippy 1,700 lbs.1,700 lbs.1,500 lbs.$3.90 per lb.$4.00 per lb.$4.00 per lb.=$6,630 =$6,800 =$6,000 Price variance$170 favorableQuantity variance$800 unfavorable Actual Quantity Actual Quantity Standard Quantity Actual Price Standard Price Standard PriceMaterial Variances SummaryZippyMaterial VariancesHanson purchased and used 1,700 pounds.How are the variances computed if the amount purchased differs from the amount used?The price variance is computed on the entire quantity purchased.The quantity variance is computed only on the quantity used.Hanson Inc.has the following material standard to manufacture one Zippy:1.5 pounds per Zippy at$4.00 per pound Last week 2,800 pounds of material were purchased at a total cost of$10,920,and 1,700 pounds were used to make 1,000 Zippies.Material Variances ContinuedZippy Actual Quantity Actual Quantity Purchased Purchased Actual Price Standard Price 2,800 lbs.2,800 lbs.$3.90 per lb.$4.00 per lb.=$10,920 =$11,200 Price variance$280 favorable Price variance increases because quantity purchased increases.Material Variances ContinuedZippy Actual Quantity Used Standard Quantity Standard Price Standard Price 1,700 lbs.1,500 lbs.$4.00 per lb.$4.00 per lb.=$6,800 =$6,000 Quantity variance$800 unfavorableQuantity variance is unchanged because actual and standard quantities are unchanged.Material Variances ContinuedZippyIsolation of Material VariancesI need the price variancesooner so that I can betteridentify purchasing problems.You accountants just dontunderstand the problems thatpurchasing managers have.Ill start computingthe price variancewhen material ispurchased rather thanwhen its used.Responsibility for Material VariancesI am not responsible for this unfavorable materialquantity variance.You purchased cheapmaterial,so my peoplehad to use more of it.You used too much material because of poorly trained workers and poorly maintained equipment.Also,your poor scheduling sometimes requires me to rush order material at a higher price,causing unfavorable price variances.Standard CostsNow lets calculate standard cost variances for direct labor.Hanson Inc.has the following direct labor standard to manufacture one Zippy:1.5 standard hours per Zippy at$6.00 perdirect labor hour Last week 1,550 direct labor hours were worked at a total labor cost of$9,610 to make 1,000 Zippies.Labor Variances ExampleZippy What was Hansons actual rate(AR)for labor for the week?a.$6.20 per hour.b.$6.00 per hour.c.$5.80 per hour.d.$5.60 per hour.Labor VariancesZippy What was Hansons actual rate(AR)for labor for the week?a.$6.20 per hour.b.$6.00 per hour.c.$5.80 per hour.d.$5.60 per hour.Labor Variances AR=$9,610 1,550 hours AR=$6.20 per hourZippy Hansons labor rate variance(LRV)for the week was:a.$310 unfavorable.b.$310 favorable.c.$300 unfavorable.d.$300 favorable.Labor VariancesZippy Hansons labor rate variance(LRV)for the week was:a.$310 unfavorable.b.$310 favorable.c.$300 unfavorable.d.$300 favorable.Labor Variances LRV=AH(AR-SR)LRV=1,550 hrs($6.20-$6.00)LRV=$310 unfavorableZippy The standard hours(SH)of labor 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.Labor VariancesZippy The standard hours(SH)of labor 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.Labor Variances SH=1,000 units 1.5 hours per unit SH=1,500 hoursZippy Hansons labor efficiency variance(LEV)for the week was:a.$290 unfavorable.b.$290 favorable.c.$300 unfavorable.d.$300 favorable.Labor VariancesZippy Hansons labor efficiency variance(LEV)for the week was:a.$290 unfavorable.b.$290 favorable.c.$300 unfavorable.d.$300 favorable.Labor Variances LEV=SR(AH-SH)LEV=$6.00(1,550 hrs-1,500 hrs)LEV=$300 unfavorableZippy Actual Hours Actual Hours Standard Hours Actual Rate Standard Rate Standard RateLabor Variances SummaryRate variance$310 unfavorableEfficiency variance$300 unfavorable 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 ZippyLabor Rate Variance A Closer LookHigh skill,high rateLow skill,low rateUsing highly paid skilled workers toperform unskilled tasks results in anunfavorable rate variance.Production managers who make work assignmentsare generally responsible for rate variances.Labor Efficiency Variance A Closer LookUnfavorableEfficiencyVariancePoorlytrainedworkersPoorqualitymaterialsPoorlymaintainedequipmentPoorsupervisionof workersResponsibility for Labor VariancesI am not responsible for the unfavorable laborefficiency variance!You purchased cheapmaterial,so it took moretime to process it.You used too much time because of poorly trained workers and poor supervision.Responsibility for Labor VariancesMaybe I can attribute the laborand material variances to personnel for hiring the wrong peopleand training them poorly.Standard CostsNow lets calculate standard cost variances for the last of the variable production costs variable manufacturing overhead.Hanson Inc.has the following variable manufacturing overhead standard tomanufacture one Zippy:1.5 standard hours per Zippy at$3.00 perdirect labor hour Last week 1,550 hours were worked to make 1,000 Zippies,and$5,115 was spent forvariable manufacturing overhead.Variable ManufacturingOverhead Variances ExampleZippy What was Hansons actual rate(AR)for variable manufacturing overhead rate for the week?a.$3.00 per hour.b.$3.19 per hour.c.$3.30 per hour.d.$4.50 per hour.Variable ManufacturingOverhead VariancesZippy What was Hansons actual rate(AR)for variable manufacturing overhead rate for 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 hourZippy Hansons spending variance(SV)for variable manufacturing overhead forthe week was:a.$465 unfavorable.b.$400 favorable.c.$335 unfavorable.d.$300 favorable.Variable ManufacturingOverhead VariancesZippy Hansons spending variance(SV)for variable manufacturing overhead forthe week was:a.$465 unfavorable.b.$400 favorable.c.$335 unfavorable.d.$300 favorable.Variable ManufacturingOverhead Variances SV=AH(AR-SR)SV=1,550 hrs($3.30-$3.00)SV=$465 unfavorableZippy Hansons efficiency variance(EV)for variable manufacturing overhead for the week was:a.$435 unfavorable.b.$435 favorable.c.$150 unfavorable.d.$150 favorable.Variable ManufacturingOverhead VariancesZippy Hansons efficiency variance(EV)for variable manufacturing overhead for the week was:a.$435 unfavorable.b.$435 favorable.c.$150 unfavorable.d.$150 favorable.Variable ManufacturingOverhead Variances EV=SR(AH-SH)EV=$3.00(1,550 hrs-1,500 hrs)EV=$150 unfavorable1,000 units 1.5 hrs per unitZippySpending variance$465 unfavorableEfficiency variance$150 unfavorable 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 RateVariable ManufacturingOverhead VariancesZippyVariable Manufacturing Overhead Variances A Closer LookIf variable overhead is applied on the basisof direct labor hours,the labor efficiencyand variable overhead efficiency varianceswill move in tandem.Larger variances,in dollar amount or as a percentage of the standard,are investigated first.Variance Analysis and Management by ExceptionHow do I know which variances to investigate?Advantages of Standard CostsManagement byexceptionImproved cost control and performanceevaluationBetter Informationfor planning anddecision makingPossible reductionsin production costsAdvantagesPotentialProblemsEmphasis on negativemay impact morale.Emphasizing standardsmay exclude otherimportant objectives.Favorable variancesmay be misinterpreted.Continuous improvementmay be moreimportant thanmeeting standards.Standard costreports maynot be timely.Labor quantity standardsand efficiency variancesmay not be appropriate.The Balanced ScorecardManagement translates its strategy into performance measures that employees understand and accept.PerformancemeasuresFinancialCustomersLearningand growthInternalbusinessprocessesThe Balanced ScorecardHow do we lookto the owners?How can wecontinually learn,grow,and improve?In which internalbusiness processes must we excel?How do we lookto customers?The Balanced ScorecardLearning improvesbusiness processes.Improved businessprocesses improvecustomer satisfaction.Improving customersatisfaction improvesfinancial results.Process time is the only value-added time.Delivery Performance MeasuresWait TimeProcess Time+Inspection Time+Move Time+Queue Time Order ReceivedProductionStartedGoods ShippedDelivery Cycle TimeThroughput TimeDelivery Performance MeasuresManufacturingCycleEfficiency Value-added timeManufacturing cycle time=Wait TimeThroughput TimeProcess Time+Inspection Time+Move Time+Queue Time Order ReceivedProductionStartedGoods ShippedDelivery Cycle TimeEnd of Chapter 10