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Chapter 10 - Flashcards

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Class:ACC 312 - FUNDAMENTALS OF MANAGERIAL ACC
Subject:Accounting
University:University of Texas - Austin
Term:Spring 2010
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Standard Cost budget for the production of one unit of product or service (predetermined)
Cost Variance Difference between actual and standard cost
Management by Exception the process of following up on only significant cost variances
perfection (or ideal) standard one that can be attained only under nearly perfect operating conditions.
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practical (attainable) standards tight but practical, but still are expected to be attained
standard direct material quantity total amount of direct material normally required to produce a finished product, including allowances for normal waste or inefficiency.
standard direct material price the total delivered cost, after subtracting any purchase discounts
standard direct labor quantity the number of direct labor hours normally needed to manufacture one unit of product
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standard direct labor rate the total hourly cost of compensation, including fringe benefits
direct material price variance (purchase price variance)= (PQ x AP) - (PQ x SP)= PQ(AP-SP)
direct material quantity variance (AQ x SP) - (SQ x SP)= SP(AQ-SQ)
direct labor rate variance (AH x AR) - (AH x SR)= AH(AR-SR)
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direct labor efficiency variance SR(AH-SH)
standard costing system standard costs of direct material and direct labot are entered into WIP inventory
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 Standard Costbudget for the production of one unit of product or service (predetermined)
 Cost VarianceDifference between actual and standard cost
 Management by Exceptionthe process of following up on only significant cost variances
 perfection (or ideal) standardone that can be attained only under nearly perfect operating conditions.
 practical (attainable) standardstight but practical, but still are expected to be attained
 standard direct material quantitytotal amount of direct material normally required to produce a finished product, including allowances for normal waste or inefficiency.
 standard direct material pricethe total delivered cost, after subtracting any purchase discounts
 standard direct labor quantitythe number of direct labor hours normally needed to manufacture one unit of product
 standard direct labor ratethe total hourly cost of compensation, including fringe benefits
 direct material price variance(purchase price variance)= (PQ x AP) - (PQ x SP)= PQ(AP-SP)
 direct material quantity variance(AQ x SP) - (SQ x SP)= SP(AQ-SQ)
 direct labor rate variance(AH x AR) - (AH x SR)= AH(AR-SR)
 direct labor efficiency varianceSR(AH-SH)
 standard costing systemstandard costs of direct material and direct labot are entered into WIP inventory
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