Mangerial Control

In: Business and Management

Submitted By SingB92
Words 959
Pages 4
Page of notes
Variances
COST VARIANCE is deemed unfavourable if actual>standard and vice versa
DIRECT MATERIAL PRICE VARIANCE = PQ (AP-SP) PRICE VARIANCE = (PQ-AP)-(PQ-SP)…. If given a sentence such as ‘purchased 320,000kg of direct material at a total cost of $608,000 substitute (PQ-AP) with $608,000. E.g. $608,000 – (PQ-SP)
DIRECT MATERIAL QUANTITY VARIANCE = SP (AQ-SQ)……..SQ = standard KG/unit x actual good output (e.g. 38,000 dartboards)……AQ = actual kg of direct material used
DIRECT LABOR RATE VARIANCE = AH (AR-SR)……..RATE VARIANCE = (AHxAR) – (AHxSR)….if given ‘total wages for September were $84,000, 90% of which were for direct labor’ then (AHxAR) = 84,000 x 0.9
DIRECT LABOR EFFICIENCY VARIANCE = SR (AH – SH)……..SH = standard hour/unit x actual good output + work 1
VARIABLE OVERHEAD SPENDING VARIANCE = AH (AR-SR)
VAIABLE OVERHEAD EFFICIENCY VARIANCE = SVR (AH –SH)…………SVR = standard variable overhead ratio…….SH = actual output x standard quantity of direct labour
FIXED OH BUDGET VARIANCE = Actual FOH – Budgeted FOH ……. Budgeted FOH may be given in annual and need to be turned into monthly e.g. X/12
FIXED OH VOLUME VARIANCE = Budgeted FOH – Applied FOH……. Applied = PROHR x standard hours. In order to determine applied need to work out Predetermined OH rate. Done so by (BUDGETED FOH/Budgeted Activity Level)……..Budgeted Activity Level = Budgeted output x standard quantity of direct labour…or machine hours etc. VOLUME VARIANCE IS NEVER FAVOURABLE OR UNFAVOURABLE…….could also be units produced x FOH cost e.g. (5 hours at $3) = 15
VARIABLE OH SPENDING VARIANCE = AH (AR – SR)…….if given VOH e.g. 11,000 then it should look like this. =11,000 – (8,000 x1.50) ….where 8,000 is AH and 1.50 is SR.
VARIABLE OH EFFICIENCY VARIANCE = SR (AH – SH)..... Once again SH = units produced x standard hour/unit
TOPIC 1
Management control(MC) systems – Process…...

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