A-Variance Analysis
A-Variance Analysis
A-Variance Analysis
Standard Costs
Standards are benchmarks or “norms” for
measuring performance. In managerial accounting,
two types of standards are commonly used.
Standard Costs
Deviations from standards deemed significant
are brought to the attention of management, a
practice known as management by exception.
Standard
Amount
Direct
Material
Direct Manufacturing
Labor Overhead
Take
Identify Receive corrective
questions explanations actions
Conduct next
Analyze period’s
variances operations
Prepare standard
Begin
cost performance
report
McGraw-Hill/Irwin Slide 4
11-3
McGraw-Hill/Irwin Slide 5
Learning Objective 1
McGraw-Hill/Irwin Slide 7
Price Quantity
Standards Standards
McGraw-Hill/Irwin Slide 8
11-5
Setting Standards
McGraw-Hill/Irwin Slide 9
Rate Time
Standards Standards
McGraw-Hill/Irwin Slide 10
11-6
Rate Quantity
Standards Standards
McGraw-Hill/Irwin Slide 11
McGraw-Hill/Irwin Slide 12
11-7
Variance Analysis
McGraw-Hill/Irwin Slide 14
11-8
Variance Analysis
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McGraw-Hill/Irwin Slide 16
11-9
McGraw-Hill/Irwin Slide 17
McGraw-Hill/Irwin Slide 18
11-10
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McGraw-Hill/Irwin Slide 20
11-11
McGraw-Hill/Irwin Slide 21
Learning Objective 2
McGraw-Hill/Irwin Slide 22
11-12
McGraw-Hill/Irwin Slide 23
McGraw-Hill/Irwin Slide 24
11-13
McGraw-Hill/Irwin Slide 25
McGraw-Hill/Irwin Slide 26
11-14
Material Variances:
Using the Factored Equations
McGraw-Hill/Irwin Slide 27
McGraw-Hill/Irwin Slide 28
11-15
Material Variances
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McGraw-Hill/Irwin Slide 30
11-16
McGraw-Hill/Irwin Slide 31
Zippy
Quick Check
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11-17
Zippy
Quick Check
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Zippy
Quick Check
McGraw-Hill/Irwin Slide 34
11-18
Zippy
Quick Check
McGraw-Hill/Irwin Slide 35
Zippy
Quick Check
McGraw-Hill/Irwin Slide 36
11-19
Zippy
Quick Check
Zippy
Quick Check Continued
McGraw-Hill/Irwin Slide 38
11-20
Zippy
Quick Check Continued
Zippy
Quick Check Continued
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 is
unchanged because
actual and standard Quantity variance
quantities are unchanged. $800 unfavorable
McGraw-Hill/Irwin Slide 40
11-21
Learning Objective 3
McGraw-Hill/Irwin Slide 41
McGraw-Hill/Irwin Slide 42
11-22
McGraw-Hill/Irwin Slide 43
McGraw-Hill/Irwin Slide 44
11-23
McGraw-Hill/Irwin Slide 45
Labor Variances:
Using the Factored Equations
McGraw-Hill/Irwin Slide 46
11-24
Quality of production
supervision.
Quality of training
provided to employees.
Production Manager
McGraw-Hill/Irwin Slide 47
McGraw-Hill/Irwin Slide 48
11-25
Zippy
Quick Check
McGraw-Hill/Irwin Slide 49
Zippy
Quick Check
McGraw-Hill/Irwin Slide 50
11-26
Zippy
Quick Check
McGraw-Hill/Irwin Slide 51
Zippy
Quick Check
McGraw-Hill/Irwin Slide 52
11-27
Zippy
Quick Check
McGraw-Hill/Irwin Slide 53
Zippy
Quick Check
Learning Objective 4
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11-29
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11-30
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McGraw-Hill/Irwin Slide 60
11-31
Zippy
Quick Check
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Zippy
Quick Check
McGraw-Hill/Irwin Slide 62
11-32
Zippy
Quick Check
McGraw-Hill/Irwin Slide 63
Zippy
Quick Check
McGraw-Hill/Irwin Slide 64
11-33
Zippy
Quick Check
Zippy
Quick Check