Usefulness of variance analysis, Cost Accounting

Assignment Help:

Usefulness of Variance Analysis

Carefully note that while prices are being charged to production, it can be done at the actual or standard price. For purposes of making variances analysis useful, instant and easily understood, we will suppose that the process of production changes the costs to production units at the standard costs. When units are changed along with standard costs, it is now extremely easily to compare the standard cost along with the actual costs and compute the variance immediately: thus, the responsibility for the variances can also be assigned immediately and corrective measures implemented.

We will see at variances in the given order as:

a) Direct Material Total Variance

b) Direct Labour Total Variance

c) Variable Overhead Total Variance

d) Fixed Overhead Total Variance.

For purposes of our calculations, we will suppose the given basic data for a company:

The standard cost for the production of a radio cassette model named as stereo F262 is given as:

 Inputs

 Standard quantity

 Standard price (shs)

 Direct materials:

 3 kg

 4.00

 Direct labour:

 2.5 hrs

 14.00

Throughout the month, 6,500 kg of raw materials were purchased at shs.3.80 per kilo and all of it was utilized to produce 2000 units of finished products. And 4,500 hours of direct labour time were utilized also at a total cost of shs.64,350.


Related Discussions:- Usefulness of variance analysis

Idle capacity, How does idel capacity effect cost behavior patterns and fac...

How does idel capacity effect cost behavior patterns and factory overhead application methods

Describe the concept of full cost recovery with illustrative, Describe the ...

Describe the concept of full cost recovery with illustrative examples.

Contribution, CONTRIBUTION : It is the variation between the marginal cost ...

CONTRIBUTION : It is the variation between the marginal cost of sales and sales and it contributes towards fixed profit and expenses.  It is differ from the profit which is the net

Explain the principles of kaizen costing, SD manufactures and sells a small...

SD manufactures and sells a small range of timber based  products. The main differences b/w the products are their size and the type of timber they used. SD prepares annual budgets

Explain the respective roles of the securities, Explain the respective role...

Explain the respective roles of the Securities and Exchange Commission (SEC) and the Internal Revenue Service (IRS) in the setting of accounting standards?

Statements on tax standards, Compare the American Institute of CPAs' (AICPA...

Compare the American Institute of CPAs' (AICPA) Statements on Tax Standards (SSTS) and the Treasury Department Circular 230 rules to practice before the Internal Revenue Service (I

Estimate the selling price and profit, Slash and Burn is a monopolist that ...

Slash and Burn is a monopolist that can sell its output at these prices and with these total costs:                    Output             Price        Total Cost

Cost accounting, Cost Accounting Cost accounting has been defined via ...

Cost Accounting Cost accounting has been defined via many accounting scholars in different forums. There is no single watertight definition of cost accounting, however the var

Limitations of budgeting, Limitations of Budgeting 1. Too mush relian...

Limitations of Budgeting 1. Too mush reliance may reason resistance or inflexibility to change. 2. Difficult to set levels of attainment. It may result into too tight budg

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd