文档介绍：LECTURE 5
Standard Costing;
Direct Materials and Labour variances
Review
Objectif of the management accounting :
Introduction
Financial measures of performance:
Introduction
The importance of performance evaluation:
Prevent waste of money
Analyze the costs vaiances, better achieve financial goals
A. Preliminary analysis of variances
“In the Box” Company (ITB) produces cardboard boxes and uses a standard absorption costing system. The following standard requirements for U-Beaut Big Boxes were determined at the firm’s budgeted production level of 60,000 boxes per month:
 
Direct materials, 10 square metres of cardboard at 25c per sq. metre ($ unit)
(for 60,000 units this would have been $150,000)
Direct labour, 20 minutes per box at $18 per hour ($6 per unit)
(for 60,000 units this would have been $360,000)
 
Overhead is allocated using machine hours, and each U-Beaut Box takes 40 mns machine time. Budgeted fixed and variable overhead were $36,000 and $60,000 (60c per unit and $1per unit) respectively.
 
During a particular period the following transactions took place:
Output 50,pleted boxes (no WIP)
Cardboard purchased 600,000 sq. metres for $144,000 cash (24c per )
Cardboard used 520,000 sq metres @ 24c = $124,800
Direct labour hours worked 16,500 hours costing $305,250 ($ per DL hour)
Machine hours worked 33,000 h ours
Actual overhead incurred $37,400 fixed; $59,500 variable
1. Static and Flexible Budgets
Static budget?
Budgeted costs for 60,000 units.
Flexible Budget?
Budgeted costs for 50,000 units.
2. Variance Report
Steps in preparing the variance report
(1) Write the actual costs in the left-hand column.
(2) Show the static budget costs (the budgeted costs for 60,000 boxes) in the right-hand column.
(3) Flex the budget (see below), . restate the static budget for an activity level of 50,000 boxes. Insert these figures in the flexible budget column (the middle column) in the table.
(4) Calculate all variances and write the