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chapter 4 special addendum

. Key ConceptThe purpose of the control function in management is to make sure that the goals of the organization are being attained.. . Timing of Budgets/Accounting Journal Entries. Approximately four months (sometimes longer) from start of new fiscal year: Operating Budget is compiledDuring each Budget Period (say one month): Budget (Plan) is used to make operating decisionsChanges in sales or production schedules can affect actual operating outcomeAt end of Period (say end of month), firs273

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chapter 4 special addendum

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    1. Chapter 4 Special Addendum Discussion of Variances

    3. Timing of Budgets/Accounting Journal Entries Approximately four months (sometimes longer) from start of new fiscal year: Operating Budget is compiled During each Budget Period (say one month): Budget (Plan) is used to make operating decisions Changes in sales or production schedules can affect actual operating outcome At end of Period (say end of month), first entry is made to the books reflecting what costs we know to be true and using estimates and actual numbers for pre-selected cost drivers (such as multiplying the estimated predetermined overhead rate times the actual number of labor hours) on costs we will not know for a period of time (eg., manufacturing overhead costs) When actual bills come in, adjusting journal entries are made to show real COGS.

    4. Variance Analysis

    5. Standard Costing

    6. Standard Costing

    7. Ideal vs Practical Standards

    8. Ideal vs Practical Standards

    9. Standard Costing Topics

    10. Flexible Budgeting with Standard Costs

    11. Flexible Budgeting with Standard Costs

    12. Flexible Budgeting with Standard Costs

    13. Flexible Budgeting with Standard Costs

    14. Sales Volume Variance

    15. Sales Volume Variance

    16. Flexible Budget Variance

    17. Flexible Budget Variance

    18. Flexible Budget Variance

    19. Sales Price Variance

    20. Variance Analysis

    21. Variance Analysis

    22. Direct Material Variances

    23. Direct Material Variances

    24. Direct Material Variances AQ X AP AQ X SP AQ X SP SQ X SP 35,000 X $1.90 35,000 X $2.00 33,600 X $2.00 32,000 X $2.00 = $66,500 = $70,000 = $67,200 = $64,000 $3,500 F $3,200 Price Var. Usage Var. The model above is when quantities purchased are not the same as quantities used.

    25. Direct Material Variances AH X AR AH X SR SH* X SR 8,400 X $12.10 8,400 X $12.00 8,000 X $12.00 = $101,640 = $100,800 = $96,000 $840 U $4,800 U Rate Var. Efficiency Var. Total Direct Labor Variance = $840 U + $4,800 U = $5,640 U *SH = 1,600 chairs X 5 hrs/chair

    26. Direct Labor Variances

    27. Variable Overhead Variances Actual Variable AH X SVR SH X SVR Overhead Expense 8,400 X $3.00 8,000 X $3.00 = $23,720 =$25,200 = $24,000 $1,480 F $1,200 U Spending Variance Efficiency Variance Total Variable Overhead Variance = $1,480 F +$1,200 U = $280 F

    28. Variable Overhead Variances

    29. Fixed Overhead Variances

    30. Fixed Overhead Variances Actual Fixed Budgeted Applied Overhead Expense Fixed Overhead Fixed Overhead = $16,000 = $15,000 = $16,000 $1,000 U $1,000 F Spending Variance Volume Variance

    31. Overhead Variances

    32. Overhead Variances

    33. Selling and Administrative Expense Variance

    34. Selling and Administrative Expense Variance

    35. Selling and Administrative Expense Variance

    36. Interpreting and Using Variance Analysis

    37. Interpreting and Using Variance Analysis

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