16 Standard Costing Variance Analysis and Kaizen Costing
![16 Standard Costing, Variance Analysis and Kaizen Costing Mc. Graw-Hill/Irwin Copyright © 2008 by 16 Standard Costing, Variance Analysis and Kaizen Costing Mc. Graw-Hill/Irwin Copyright © 2008 by](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-1.jpg)
![2 Learning Objective 1 2 Learning Objective 1](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-2.jpg)
![3 Using Standard-Costing Systems for Control based on carefully predetermined amounts. Standard costs are 3 Using Standard-Costing Systems for Control based on carefully predetermined amounts. Standard costs are](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-3.jpg)
![4 Using Standard-Costing Systems for Control STANDARD COST a budget for the production of 4 Using Standard-Costing Systems for Control STANDARD COST a budget for the production of](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-4.jpg)
![Using Standard-Costing Systems for Control This variance is unfavorable because the actual cost exceeds Using Standard-Costing Systems for Control This variance is unfavorable because the actual cost exceeds](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-5.jpg)
![Management by Exception Managers focus on quantities and costs that deviate significantly from standards Management by Exception Managers focus on quantities and costs that deviate significantly from standards](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-6.jpg)
![7 Management by Exception Take the time to investigate only significant cost variances. What 7 Management by Exception Take the time to investigate only significant cost variances. What](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-7.jpg)
![8 Variance Analysis Cycle Identify questions Receive explanations Conduct next period’s operations Analyze variances 8 Variance Analysis Cycle Identify questions Receive explanations Conduct next period’s operations Analyze variances](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-8.jpg)
![9 Setting Standards Analysis of historical data What DID the product cost? Used in 9 Setting Standards Analysis of historical data What DID the product cost? Used in](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-9.jpg)
![10 Participation in Setting Standards Accountants, engineers, personnel administrators, and production managers combine efforts 10 Participation in Setting Standards Accountants, engineers, personnel administrators, and production managers combine efforts](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-10.jpg)
![11 Learning Objective 2 11 Learning Objective 2](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-11.jpg)
![12 Perfection versus Practical Standards: A Behavioral Issue PERFECTION STANDARDS PRACTICAL OR ATTAINABLE STANDARDS 12 Perfection versus Practical Standards: A Behavioral Issue PERFECTION STANDARDS PRACTICAL OR ATTAINABLE STANDARDS](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-12.jpg)
![13 Perfection versus Practical Standards: A Behavioral Issue Should we use practical standards or 13 Perfection versus Practical Standards: A Behavioral Issue Should we use practical standards or](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-13.jpg)
![14 Perfection versus Practical Standards: A Behavioral Issue I agree. Perfection standards are unattainable 14 Perfection versus Practical Standards: A Behavioral Issue I agree. Perfection standards are unattainable](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-14.jpg)
![15 Setting Standards – Direct Materials Price Standards Quantity Standards Use competitive bids for 15 Setting Standards – Direct Materials Price Standards Quantity Standards Use competitive bids for](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-15.jpg)
![16 Setting Standards – Direct Materials The standard materials cost for one unit of 16 Setting Standards – Direct Materials The standard materials cost for one unit of](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-16.jpg)
![17 Setting Standards – Direct Labor Rate standards Efficiency standards Use wage surveys and 17 Setting Standards – Direct Labor Rate standards Efficiency standards Use wage surveys and](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-17.jpg)
![18 Setting Standards – Direct Labor The standard labor cost for one unit of 18 Setting Standards – Direct Labor The standard labor cost for one unit of](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-18.jpg)
![19 Standard Cost in Service Industries l Jobs with repetitive tasks lend themselves to 19 Standard Cost in Service Industries l Jobs with repetitive tasks lend themselves to](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-19.jpg)
![20 Standard Cost in Service Industries 20 Standard Cost in Service Industries](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-20.jpg)
![21 Costs and Benefits of Standard-Costing Systems Costs Benefits IMPROVED DECISION MAKING, BUT: Implementing 21 Costs and Benefits of Standard-Costing Systems Costs Benefits IMPROVED DECISION MAKING, BUT: Implementing](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-21.jpg)
![22 Cost Variance Analysis Standard cost variances Price variance Quantity variance The difference between 22 Cost Variance Analysis Standard cost variances Price variance Quantity variance The difference between](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-22.jpg)
![23 A General Model for Variance Analysis Actual quantity × Actual price Actual quantity 23 A General Model for Variance Analysis Actual quantity × Actual price Actual quantity](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-23.jpg)
![24 A General Model for Variance Analysis Actual quantity × Actual price Actual quantity 24 A General Model for Variance Analysis Actual quantity × Actual price Actual quantity](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-24.jpg)
![25 A General Model for Variance Analysis Actual quantity × Actual price Actual quantity 25 A General Model for Variance Analysis Actual quantity × Actual price Actual quantity](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-25.jpg)
![26 A General Model for Variance Analysis Actual quantity × Actual price Actual quantity 26 A General Model for Variance Analysis Actual quantity × Actual price Actual quantity](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-26.jpg)
![27 Standard Costs Let’s use the concepts of the general model to calculate standard 27 Standard Costs Let’s use the concepts of the general model to calculate standard](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-27.jpg)
![28 Learning Objective 3 28 Learning Objective 3](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-28.jpg)
![29 Materials Variances Koala Camp Gear Company in Melbourne Australia has the following direct 29 Materials Variances Koala Camp Gear Company in Melbourne Australia has the following direct](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-29.jpg)
![30 Materials Variances Actual quantity purchased × Actual price Actual quantity purchased × Standard 30 Materials Variances Actual quantity purchased × Actual price Actual quantity purchased × Standard](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-30.jpg)
![31 Materials Variances SQ = 3, 000 tents × 12 sq m per tent 31 Materials Variances SQ = 3, 000 tents × 12 sq m per tent](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-31.jpg)
![32 Materials Variances We may also calculate materials variances using formulas: MPV = AQp(AP 32 Materials Variances We may also calculate materials variances using formulas: MPV = AQp(AP](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-32.jpg)
![33 Reporting Materials Variances I need the variances as soon as possible so that 33 Reporting Materials Variances I need the variances as soon as possible so that](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-33.jpg)
![34 Responsibility for Materials Variances I am not responsible for this unfavorable materials usage 34 Responsibility for Materials Variances I am not responsible for this unfavorable materials usage](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-34.jpg)
![35 Standard Costs Now let’s calculate standard cost variances for direct labor. 35 Standard Costs Now let’s calculate standard cost variances for direct labor.](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-35.jpg)
![36 Labor Variances Koala has the following direct labor standard to manufacture one Tree 36 Labor Variances Koala has the following direct labor standard to manufacture one Tree](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-36.jpg)
![37 Labor Variances SH = 3, 000 tents × 2 hours per tent SH 37 Labor Variances SH = 3, 000 tents × 2 hours per tent SH](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-37.jpg)
![38 Labor Variances We may also calculate labor variances using formulas: LRV = AH(AR 38 Labor Variances We may also calculate labor variances using formulas: LRV = AH(AR](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-38.jpg)
![39 Labor Rate Variance – A Closer Look Using highly paid skilled workers to 39 Labor Rate Variance – A Closer Look Using highly paid skilled workers to](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-39.jpg)
![40 Labor Efficiency Variance – A Closer Look Poorly trained workers Poor quality materials 40 Labor Efficiency Variance – A Closer Look Poorly trained workers Poor quality materials](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-40.jpg)
![41 Responsibility for Labor Variances I am not responsible for the unfavorable labor efficiency 41 Responsibility for Labor Variances I am not responsible for the unfavorable labor efficiency](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-41.jpg)
![42 Responsibility for Labor Variances Maybe I can attribute the labor and materials variances 42 Responsibility for Labor Variances Maybe I can attribute the labor and materials variances](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-42.jpg)
![43 Allowance for Defects or Spoilage In some manufacturing processes, a certain amount of 43 Allowance for Defects or Spoilage In some manufacturing processes, a certain amount of](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-43.jpg)
![44 Learning Objective 4 44 Learning Objective 4](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-44.jpg)
![45 Significance of Cost Variances: When to Follow Up How does a manager know 45 Significance of Cost Variances: When to Follow Up How does a manager know](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-45.jpg)
![46 Significance of Cost Variances l Size of variance l l l What clues 46 Significance of Cost Variances l Size of variance l l l What clues](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-46.jpg)
![47 Significance of Cost Variances: When to Follow Up How do I know which 47 Significance of Cost Variances: When to Follow Up How do I know which](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-47.jpg)
![48 Significance of Cost Variances: When to Follow Up What about recurring variances? None 48 Significance of Cost Variances: When to Follow Up What about recurring variances? None](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-48.jpg)
![49 Significance of Cost Variances: When to Follow Up What about trends? None of 49 Significance of Cost Variances: When to Follow Up What about trends? None of](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-49.jpg)
![50 Significance of Cost Variances: When to Follow Up Controllability Favorable variances A manager 50 Significance of Cost Variances: When to Follow Up Controllability Favorable variances A manager](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-50.jpg)
![51 Statistical Analysis Control charts Display variations in a process and help to analyze 51 Statistical Analysis Control charts Display variations in a process and help to analyze](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-51.jpg)
![52 Statistical Analysis Warning signals for investigation Favorable limit • Desired value • • 52 Statistical Analysis Warning signals for investigation Favorable limit • Desired value • •](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-52.jpg)
![53 Learning Objective 5 53 Learning Objective 5](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-53.jpg)
![54 Behavioral Effects of Standard Costing Standard costs, budgets and variances are used to 54 Behavioral Effects of Standard Costing Standard costs, budgets and variances are used to](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-54.jpg)
![55 Which Managers Influence Cost Variances? Direct-materials price variance Purchasing manager Get the best 55 Which Managers Influence Cost Variances? Direct-materials price variance Purchasing manager Get the best](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-55.jpg)
![56 Exh. 16 -5 Interaction among Variances Interaction among variances often occurs, making it 56 Exh. 16 -5 Interaction among Variances Interaction among variances often occurs, making it](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-56.jpg)
![57 Learning Objective 6 57 Learning Objective 6](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-57.jpg)
![58 Using Standard Costs for Product Costing Work-in-process inventory Direct-materials cost Direct-labor cost Manufacturing 58 Using Standard Costs for Product Costing Work-in-process inventory Direct-materials cost Direct-labor cost Manufacturing](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-58.jpg)
![59 l l Standard Cost Journal Entries Inventories are recorded at standard cost. Variances 59 l l Standard Cost Journal Entries Inventories are recorded at standard cost. Variances](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-59.jpg)
![60 Impact of Information Technology on Standard Costing CAD designers can access the data 60 Impact of Information Technology on Standard Costing CAD designers can access the data](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-60.jpg)
![61 Learning Objective 7 61 Learning Objective 7](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-61.jpg)
![62 Standard Costing: Its Traditional Advantages Sensible cost comparisons Performance evaluation Management by exception 62 Standard Costing: Its Traditional Advantages Sensible cost comparisons Performance evaluation Management by exception](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-62.jpg)
![63 Learning Objective 8 63 Learning Objective 8](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-63.jpg)
![64 l l l Criticisms of Standard Costing in Today’s Manufacturing Environment l There 64 l l l Criticisms of Standard Costing in Today’s Manufacturing Environment l There](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-64.jpg)
![65 Adaptation of Standard-Costing Systems Applications of standard costing have adapted to changes in 65 Adaptation of Standard-Costing Systems Applications of standard costing have adapted to changes in](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-65.jpg)
![66 Adaptation of Standard-Costing Systems Applications of standard costing have adapted to changes in 66 Adaptation of Standard-Costing Systems Applications of standard costing have adapted to changes in](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-66.jpg)
![67 Adaptation of Standard-Costing Systems Applications of standard costing have adapted to changes in 67 Adaptation of Standard-Costing Systems Applications of standard costing have adapted to changes in](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-67.jpg)
![68 Learning Objective 9 68 Learning Objective 9](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-68.jpg)
![69 l Comparing Standard Costing and Kaizen Costing Standard costing – the use of 69 l Comparing Standard Costing and Kaizen Costing Standard costing – the use of](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-69.jpg)
![Kaizen Costing Current year cost base Cost per product unit 70 Exh. 16 -7 Kaizen Costing Current year cost base Cost per product unit 70 Exh. 16 -7](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-70.jpg)
![71 Learning Objective 10 71 Learning Objective 10](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-71.jpg)
![72 Production Mix and Yield Variances l l l Nearly all production processes require 72 Production Mix and Yield Variances l l l Nearly all production processes require](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-72.jpg)
![73 End of Chapter 16 73 End of Chapter 16](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-73.jpg)
- Slides: 73
![16 Standard Costing Variance Analysis and Kaizen Costing Mc GrawHillIrwin Copyright 2008 by 16 Standard Costing, Variance Analysis and Kaizen Costing Mc. Graw-Hill/Irwin Copyright © 2008 by](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-1.jpg)
16 Standard Costing, Variance Analysis and Kaizen Costing Mc. Graw-Hill/Irwin Copyright © 2008 by The Mc. Graw-Hill Companies, Inc. All rights reserved.
![2 Learning Objective 1 2 Learning Objective 1](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-2.jpg)
2 Learning Objective 1
![3 Using StandardCosting Systems for Control based on carefully predetermined amounts Standard costs are 3 Using Standard-Costing Systems for Control based on carefully predetermined amounts. Standard costs are](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-3.jpg)
3 Using Standard-Costing Systems for Control based on carefully predetermined amounts. Standard costs are used for planning labor and material requirements. the expected level of performance. benchmarks for measuring performance.
![4 Using StandardCosting Systems for Control STANDARD COST a budget for the production of 4 Using Standard-Costing Systems for Control STANDARD COST a budget for the production of](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-4.jpg)
4 Using Standard-Costing Systems for Control STANDARD COST a budget for the production of one unit of product or service ACTUAL COST incurred and recorded in the production of the product or service COST VARIANCE the difference between the actual cost and the standard cost
![Using StandardCosting Systems for Control This variance is unfavorable because the actual cost exceeds Using Standard-Costing Systems for Control This variance is unfavorable because the actual cost exceeds](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-5.jpg)
Using Standard-Costing Systems for Control This variance is unfavorable because the actual cost exceeds the standard cost. Standard Product cost 5 A standard cost variance is the amount by which an actual cost differs from the standard cost.
![Management by Exception Managers focus on quantities and costs that deviate significantly from standards Management by Exception Managers focus on quantities and costs that deviate significantly from standards](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-6.jpg)
Management by Exception Managers focus on quantities and costs that deviate significantly from standards (a practice known as management by exception). Amount 6 Standard Direct labor Direct materials Type of Product Cost
![7 Management by Exception Take the time to investigate only significant cost variances What 7 Management by Exception Take the time to investigate only significant cost variances. What](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-7.jpg)
7 Management by Exception Take the time to investigate only significant cost variances. What is significant? Depends on the size of the organization Depends on the production process Depends on the type of the organization
![8 Variance Analysis Cycle Identify questions Receive explanations Conduct next periods operations Analyze variances 8 Variance Analysis Cycle Identify questions Receive explanations Conduct next period’s operations Analyze variances](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-8.jpg)
8 Variance Analysis Cycle Identify questions Receive explanations Conduct next period’s operations Analyze variances Begin Take corrective actions Prepare standard cost performance report
![9 Setting Standards Analysis of historical data What DID the product cost Used in 9 Setting Standards Analysis of historical data What DID the product cost? Used in](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-9.jpg)
9 Setting Standards Analysis of historical data What DID the product cost? Used in a mature production process Task analysis What SHOULD the product cost? Analyze the process of manufacturing the product Combined approach Analyze the process for the step that has changed, but use historical data for the steps that have not changed
![10 Participation in Setting Standards Accountants engineers personnel administrators and production managers combine efforts 10 Participation in Setting Standards Accountants, engineers, personnel administrators, and production managers combine efforts](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-10.jpg)
10 Participation in Setting Standards Accountants, engineers, personnel administrators, and production managers combine efforts to set standards based on experience and expectations.
![11 Learning Objective 2 11 Learning Objective 2](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-11.jpg)
11 Learning Objective 2
![12 Perfection versus Practical Standards A Behavioral Issue PERFECTION STANDARDS PRACTICAL OR ATTAINABLE STANDARDS 12 Perfection versus Practical Standards: A Behavioral Issue PERFECTION STANDARDS PRACTICAL OR ATTAINABLE STANDARDS](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-12.jpg)
12 Perfection versus Practical Standards: A Behavioral Issue PERFECTION STANDARDS PRACTICAL OR ATTAINABLE STANDARDS Can only be attained under near perfect conditions Tight as practical, but still expected to be attained • Peak efficiency • Lowest possible input prices • Best-quality material • No disruption in production • Occasional machine breakdowns • Normal amounts of raw material waste
![13 Perfection versus Practical Standards A Behavioral Issue Should we use practical standards or 13 Perfection versus Practical Standards: A Behavioral Issue Should we use practical standards or](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-13.jpg)
13 Perfection versus Practical Standards: A Behavioral Issue Should we use practical standards or perfection standards? Practical standards should be set at levels that are currently attainable with reasonable and efficient effort.
![14 Perfection versus Practical Standards A Behavioral Issue I agree Perfection standards are unattainable 14 Perfection versus Practical Standards: A Behavioral Issue I agree. Perfection standards are unattainable](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-14.jpg)
14 Perfection versus Practical Standards: A Behavioral Issue I agree. Perfection standards are unattainable and therefore discouraging to most employees.
![15 Setting Standards Direct Materials Price Standards Quantity Standards Use competitive bids for 15 Setting Standards – Direct Materials Price Standards Quantity Standards Use competitive bids for](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-15.jpg)
15 Setting Standards – Direct Materials Price Standards Quantity Standards Use competitive bids for the quality and quantity desired. Use product design specifications.
![16 Setting Standards Direct Materials The standard materials cost for one unit of 16 Setting Standards – Direct Materials The standard materials cost for one unit of](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-16.jpg)
16 Setting Standards – Direct Materials The standard materials cost for one unit of product is: Standard price for one unit of material × Standard quantity of material required for one unit of product
![17 Setting Standards Direct Labor Rate standards Efficiency standards Use wage surveys and 17 Setting Standards – Direct Labor Rate standards Efficiency standards Use wage surveys and](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-17.jpg)
17 Setting Standards – Direct Labor Rate standards Efficiency standards Use wage surveys and labor contracts. Use time and motion studies for each labor operation.
![18 Setting Standards Direct Labor The standard labor cost for one unit of 18 Setting Standards – Direct Labor The standard labor cost for one unit of](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-18.jpg)
18 Setting Standards – Direct Labor The standard labor cost for one unit of product is: Standard wage rate for one hour × Standard number of labor hours for one unit of product
![19 Standard Cost in Service Industries l Jobs with repetitive tasks lend themselves to 19 Standard Cost in Service Industries l Jobs with repetitive tasks lend themselves to](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-19.jpg)
19 Standard Cost in Service Industries l Jobs with repetitive tasks lend themselves to efficiency measures. l Computing nonmanufacturing efficiency variances requires some assumed relationship between input and output activity. Examples
![20 Standard Cost in Service Industries 20 Standard Cost in Service Industries](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-20.jpg)
20 Standard Cost in Service Industries
![21 Costs and Benefits of StandardCosting Systems Costs Benefits IMPROVED DECISION MAKING BUT Implementing 21 Costs and Benefits of Standard-Costing Systems Costs Benefits IMPROVED DECISION MAKING, BUT: Implementing](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-21.jpg)
21 Costs and Benefits of Standard-Costing Systems Costs Benefits IMPROVED DECISION MAKING, BUT: Implementing and maintaining cost standards can be time-consuming, labor-intensive, and expensive.
![22 Cost Variance Analysis Standard cost variances Price variance Quantity variance The difference between 22 Cost Variance Analysis Standard cost variances Price variance Quantity variance The difference between](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-22.jpg)
22 Cost Variance Analysis Standard cost variances Price variance Quantity variance The difference between the actual price and the standard price The difference between the actual quantity and the standard quantity
![23 A General Model for Variance Analysis Actual quantity Actual price Actual quantity 23 A General Model for Variance Analysis Actual quantity × Actual price Actual quantity](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-23.jpg)
23 A General Model for Variance Analysis Actual quantity × Actual price Actual quantity × Standard price Price / Rate variance Standard quantity × Standard price Quantity / Efficiency variance
![24 A General Model for Variance Analysis Actual quantity Actual price Actual quantity 24 A General Model for Variance Analysis Actual quantity × Actual price Actual quantity](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-24.jpg)
24 A General Model for Variance Analysis Actual quantity × Actual price Actual quantity × Standard price Price / Rate variance Standard quantity × Standard price Quantity / Efficiency variance Standard price is the amount that should have been paid for the resources acquired.
![25 A General Model for Variance Analysis Actual quantity Actual price Actual quantity 25 A General Model for Variance Analysis Actual quantity × Actual price Actual quantity](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-25.jpg)
25 A General Model for Variance Analysis Actual quantity × Actual price Actual quantity × Standard price Price / Rate variance Standard quantity × Standard price Quantity / Efficiency variance Standard quantity is the quantity allowed for the actual good output.
![26 A General Model for Variance Analysis Actual quantity Actual price Actual quantity 26 A General Model for Variance Analysis Actual quantity × Actual price Actual quantity](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-26.jpg)
26 A General Model for Variance Analysis Actual quantity × Actual price Actual quantity × Standard price Price / Rate variance Materials price variance AQ(AP - SP) Labor rate variance overhead AQVariable = Actual Quantity APspending = Actualvariance Price Standard quantity × Standard price Quantity / Efficiency variance Materials quantity variance SP(AQ - SQ) Labor efficiency variance overhead SP Variable = Standard Price variance SQefficiency = Standard Quantity
![27 Standard Costs Lets use the concepts of the general model to calculate standard 27 Standard Costs Let’s use the concepts of the general model to calculate standard](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-27.jpg)
27 Standard Costs Let’s use the concepts of the general model to calculate standard cost variances, starting with direct materials.
![28 Learning Objective 3 28 Learning Objective 3](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-28.jpg)
28 Learning Objective 3
![29 Materials Variances Koala Camp Gear Company in Melbourne Australia has the following direct 29 Materials Variances Koala Camp Gear Company in Melbourne Australia has the following direct](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-29.jpg)
29 Materials Variances Koala Camp Gear Company in Melbourne Australia has the following direct material standard to manufacture one Tree Line tent: 12 square meters per tent at $8. 00 per square meter (sq m) Last month Koala purchased 40, 000 square meters at $8. 15 per square meter and used 36, 400 square meters to make 3, 000 tents.
![30 Materials Variances Actual quantity purchased Actual price Actual quantity purchased Standard 30 Materials Variances Actual quantity purchased × Actual price Actual quantity purchased × Standard](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-30.jpg)
30 Materials Variances Actual quantity purchased × Actual price Actual quantity purchased × Standard price 40, 000 sq m × $8. 15 per sq m 40, 000 sq m × $8. 00 per sq m $326, 000 $320, 000 Price variance $6, 000 Unfavorable We should compute the price variance using the actual quantity purchased.
![31 Materials Variances SQ 3 000 tents 12 sq m per tent 31 Materials Variances SQ = 3, 000 tents × 12 sq m per tent](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-31.jpg)
31 Materials Variances SQ = 3, 000 tents × 12 sq m per tent SQ = 36, 000 sq m We should compute the quantity variance using the actual quantity used. Actual quantity used × Standard price Standard quantity × Standard price 36, 400 sq m × $8. 00 per sq m 36, 000 sq m × $8. 00 per sq m $291, 200 $288, 000 Quantity variance $3, 200 Unfavorable
![32 Materials Variances We may also calculate materials variances using formulas MPV AQpAP 32 Materials Variances We may also calculate materials variances using formulas: MPV = AQp(AP](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-32.jpg)
32 Materials Variances We may also calculate materials variances using formulas: MPV = AQp(AP – SP) MPV = 40, 000 sq m × ($8. 15 – $8. 00) MPV = $6, 000 Unfavorable MQV = SP(AQu – SQ) MQV = $8. 00(36, 400 sq m – 36, 000 sq m) MQV = $3, 200 Unfavorable
![33 Reporting Materials Variances I need the variances as soon as possible so that 33 Reporting Materials Variances I need the variances as soon as possible so that](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-33.jpg)
33 Reporting Materials Variances I need the variances as soon as possible so that I can better identify problems and control costs. You accountants just don’t understand the problems we production managers have. Okay. I’ll compute the price variance when materials are purchased, and the usage variance as soon as material is used.
![34 Responsibility for Materials Variances I am not responsible for this unfavorable materials usage 34 Responsibility for Materials Variances I am not responsible for this unfavorable materials usage](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-34.jpg)
34 Responsibility for Materials Variances I am not responsible for this unfavorable materials usage variance. You bought poor quality materials, so my people had to use more of it. Your poorly trained workers and poorly maintained equipment caused the problems. Also, your poor scheduling requires rush orders of materials at higher prices, causing unfavorable price variances.
![35 Standard Costs Now lets calculate standard cost variances for direct labor 35 Standard Costs Now let’s calculate standard cost variances for direct labor.](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-35.jpg)
35 Standard Costs Now let’s calculate standard cost variances for direct labor.
![36 Labor Variances Koala has the following direct labor standard to manufacture one Tree 36 Labor Variances Koala has the following direct labor standard to manufacture one Tree](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-36.jpg)
36 Labor Variances Koala has the following direct labor standard to manufacture one Tree Line tent: 2 standard hours per tent at $18. 00 per direct labor hour Last month 5, 900 direct labor hours were worked at $19. 00 per hour to make 3, 000 tents.
![37 Labor Variances SH 3 000 tents 2 hours per tent SH 37 Labor Variances SH = 3, 000 tents × 2 hours per tent SH](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-37.jpg)
37 Labor Variances SH = 3, 000 tents × 2 hours per tent SH = 6, 000 hours Actual hours × Actual rate Actual hours × Standard rate Standard hours × Standard rate 5, 900 hours × $19. 00 per hour 5, 900 hours × $18. 00 per hour 6, 000 hours × $18. 00 per hour $112, 100 $106, 200 Rate variance $5, 900 Unfavorable $108, 000 Efficiency variance $1, 800 Favorable
![38 Labor Variances We may also calculate labor variances using formulas LRV AHAR 38 Labor Variances We may also calculate labor variances using formulas: LRV = AH(AR](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-38.jpg)
38 Labor Variances We may also calculate labor variances using formulas: LRV = AH(AR - SR) LRV = 5, 900 hrs($19. 00 - $18. 00) LRV = $5, 900 Unfavorable LEV = SR(AH - SH) LEV = $18. 00(5, 900 hrs - 6, 000 hrs) LEV = $1, 800 Favorable
![39 Labor Rate Variance A Closer Look Using highly paid skilled workers to 39 Labor Rate Variance – A Closer Look Using highly paid skilled workers to](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-39.jpg)
39 Labor Rate Variance – A Closer Look Using highly paid skilled workers to perform unskilled tasks results in an unfavorable price variance. High skill, high rate Low skill, low rate Production managers who make work assignments are generally responsible for price variances.
![40 Labor Efficiency Variance A Closer Look Poorly trained workers Poor quality materials 40 Labor Efficiency Variance – A Closer Look Poorly trained workers Poor quality materials](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-40.jpg)
40 Labor Efficiency Variance – A Closer Look Poorly trained workers Poor quality materials Unfavorable Efficiency Variance Poor supervision of workers Poorly maintained equipment
![41 Responsibility for Labor Variances I am not responsible for the unfavorable labor efficiency 41 Responsibility for Labor Variances I am not responsible for the unfavorable labor efficiency](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-41.jpg)
41 Responsibility for Labor Variances I am not responsible for the unfavorable labor efficiency variance! You bought poor quality materials, so my people took more time to process them. You used too much time because of poorly trained workers and poor supervision.
![42 Responsibility for Labor Variances Maybe I can attribute the labor and materials variances 42 Responsibility for Labor Variances Maybe I can attribute the labor and materials variances](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-42.jpg)
42 Responsibility for Labor Variances Maybe I can attribute the labor and materials variances to personnel for hiring the wrong people and training them poorly.
![43 Allowance for Defects or Spoilage In some manufacturing processes a certain amount of 43 Allowance for Defects or Spoilage In some manufacturing processes, a certain amount of](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-43.jpg)
43 Allowance for Defects or Spoilage In some manufacturing processes, a certain amount of defective production or spoilage is normal. Example: 1, 000 liters of chemicals are normally required in a chemical process in order to obtain 800 liters of good output. If total good output in February is 5, 000 liters, what is the standard allowed quantity of input? Good output quantity = 80% X Input quantity Good output quantity ÷ 80% = Input quantity allowed 5, 000 liters of good output ÷ 80% = 6, 250 liters of input allowed
![44 Learning Objective 4 44 Learning Objective 4](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-44.jpg)
44 Learning Objective 4
![45 Significance of Cost Variances When to Follow Up How does a manager know 45 Significance of Cost Variances: When to Follow Up How does a manager know](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-45.jpg)
45 Significance of Cost Variances: When to Follow Up How does a manager know when to follow up on a cost variance and when to ignore it? Size of variance Absolute amount ? Relative amount
![46 Significance of Cost Variances l Size of variance l l l What clues 46 Significance of Cost Variances l Size of variance l l l What clues](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-46.jpg)
46 Significance of Cost Variances l Size of variance l l l What clues help me to determine the variances that I should investigate? l Dollar amount Percentage of standard Recurring variances Trends Controllability Favorable variances Costs and benefits of investigation
![47 Significance of Cost Variances When to Follow Up How do I know which 47 Significance of Cost Variances: When to Follow Up How do I know which](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-47.jpg)
47 Significance of Cost Variances: When to Follow Up How do I know which variances to investigate? Larger variances, in dollar amount or as a percentage of the standard, are investigated first. We could use a rule of thumb such as: investigate all variances that are over $10, 000 or over 10 percent of the standard cost.
![48 Significance of Cost Variances When to Follow Up What about recurring variances None 48 Significance of Cost Variances: When to Follow Up What about recurring variances? None](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-48.jpg)
48 Significance of Cost Variances: When to Follow Up What about recurring variances? None of the variances are greater than $10, 000 or 10% for any one month, but they should be investigated because of they have continued for several months.
![49 Significance of Cost Variances When to Follow Up What about trends None of 49 Significance of Cost Variances: When to Follow Up What about trends? None of](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-49.jpg)
49 Significance of Cost Variances: When to Follow Up What about trends? None of the variances are greater than $10, 000 or 10% for any one month, but they should be investigated because of the unfavorable trend.
![50 Significance of Cost Variances When to Follow Up Controllability Favorable variances A manager 50 Significance of Cost Variances: When to Follow Up Controllability Favorable variances A manager](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-50.jpg)
50 Significance of Cost Variances: When to Follow Up Controllability Favorable variances A manager is more likely to investigate a variance that is controllable by someone in the organization than one that is not. It is as important to investigate significant favorable variances as well as significant unfavorable variances. Cost and benefits of investigation The decision whether to investigate a variance is a cost benefit decision
![51 Statistical Analysis Control charts Display variations in a process and help to analyze 51 Statistical Analysis Control charts Display variations in a process and help to analyze](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-51.jpg)
51 Statistical Analysis Control charts Display variations in a process and help to analyze the variations over time. Distinguish between random variations and variations that should be investigated. Provide a warning signal when variations are beyond a specified level.
![52 Statistical Analysis Warning signals for investigation Favorable limit Desired value 52 Statistical Analysis Warning signals for investigation Favorable limit • Desired value • •](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-52.jpg)
52 Statistical Analysis Warning signals for investigation Favorable limit • Desired value • • • Unfavorable limit 1 2 3 4 5 6 7 Variance measurements • 8 • 9
![53 Learning Objective 5 53 Learning Objective 5](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-53.jpg)
53 Learning Objective 5
![54 Behavioral Effects of Standard Costing Standard costs budgets and variances are used to 54 Behavioral Effects of Standard Costing Standard costs, budgets and variances are used to](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-54.jpg)
54 Behavioral Effects of Standard Costing Standard costs, budgets and variances are used to evaluate the performance of individuals and departments They can profoundly influence behavior when they are used to determine salary increases, bonuses and promotions
![55 Which Managers Influence Cost Variances Directmaterials price variance Purchasing manager Get the best 55 Which Managers Influence Cost Variances? Direct-materials price variance Purchasing manager Get the best](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-55.jpg)
55 Which Managers Influence Cost Variances? Direct-materials price variance Purchasing manager Get the best prices available for purchased goods and services through skillful purchasing practices Direct-materials quantity variance Production supervisor Skillful supervision and motivation of production employees, coupled with the careful use and handling of materials, contribute to minimal waste Direct-labor rate variance Production supervisor Generally results from using a different mix of employees than that anticipated when the standard were set Direct-labor efficiency variance Production supervisor Motivating employees toward production goals and effective work schedules improves efficiency
![56 Exh 16 5 Interaction among Variances Interaction among variances often occurs making it 56 Exh. 16 -5 Interaction among Variances Interaction among variances often occurs, making it](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-56.jpg)
56 Exh. 16 -5 Interaction among Variances Interaction among variances often occurs, making it difficult to determine the responsibility for a particular variance. Variances in one part of the value chain can be due to root causes in another part of the chain. Value chain Physical resources Research and development Design perspective Supply Human resources Produc. Distri. Marketing tion bution Customer service
![57 Learning Objective 6 57 Learning Objective 6](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-57.jpg)
57 Learning Objective 6
![58 Using Standard Costs for Product Costing Workinprocess inventory Directmaterials cost Directlabor cost Manufacturing 58 Using Standard Costs for Product Costing Work-in-process inventory Direct-materials cost Direct-labor cost Manufacturing](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-58.jpg)
58 Using Standard Costs for Product Costing Work-in-process inventory Direct-materials cost Direct-labor cost Manufacturing overhead Finished-goods inventory Product cost transferred when product is finished Product cost transferred when product is sold Cost of goods sold Income summary Expense closed into Income summary at end of accounting period Exh. 16 -6
![59 l l Standard Cost Journal Entries Inventories are recorded at standard cost Variances 59 l l Standard Cost Journal Entries Inventories are recorded at standard cost. Variances](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-59.jpg)
59 l l Standard Cost Journal Entries Inventories are recorded at standard cost. Variances are recorded as follows: l l l Favorable variances are credits, representing savings in production costs. Unfavorable variances are debits, representing excess production costs. Standard cost variances are usually closed to cost of goods sold. l l Favorable variances decrease cost of goods sold. Unfavorable variances increase cost of goods sold.
![60 Impact of Information Technology on Standard Costing CAD designers can access the data 60 Impact of Information Technology on Standard Costing CAD designers can access the data](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-60.jpg)
60 Impact of Information Technology on Standard Costing CAD designers can access the data base for instant design cost estimates. Labor time and rate are recorded at standard, using bar codes and employee IDs. Standard cost data base Materials purchases and uses are recorded at standard, using bar codes.
![61 Learning Objective 7 61 Learning Objective 7](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-61.jpg)
61 Learning Objective 7
![62 Standard Costing Its Traditional Advantages Sensible cost comparisons Performance evaluation Management by exception 62 Standard Costing: Its Traditional Advantages Sensible cost comparisons Performance evaluation Management by exception](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-62.jpg)
62 Standard Costing: Its Traditional Advantages Sensible cost comparisons Performance evaluation Management by exception Advantages More stable product costs Employee motivation Less expensive than actual- or normalcosting systems
![63 Learning Objective 8 63 Learning Objective 8](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-63.jpg)
63 Learning Objective 8
![64 l l l Criticisms of Standard Costing in Todays Manufacturing Environment l There 64 l l l Criticisms of Standard Costing in Today’s Manufacturing Environment l There](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-64.jpg)
64 l l l Criticisms of Standard Costing in Today’s Manufacturing Environment l There is too much focus on the cost and efficiency of direct labor. l Standard costing may not be applicable in flexible manufacturing operations with short life-cycle products. Automation reduces labor costs and the significance of labor variances. l There is too much focus on cost minimization rather than increasing product quality or customer service. Automated manufacturing processes tend to be more consistent in meeting production specifications. l Variance reports are often provided too late to be useful to managers. Variances are often too aggregated. They are not tied to specific product lines, production batches, or to the flexible management system.
![65 Adaptation of StandardCosting Systems Applications of standard costing have adapted to changes in 65 Adaptation of Standard-Costing Systems Applications of standard costing have adapted to changes in](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-65.jpg)
65 Adaptation of Standard-Costing Systems Applications of standard costing have adapted to changes in the manufacturing environment and the resulting criticisms leveled at standard costing. Reduced importance of labor standards. Automation means more overhead, less labor. Less use of labor as a cost driver. More emphasis on material and overhead costs.
![66 Adaptation of StandardCosting Systems Applications of standard costing have adapted to changes in 66 Adaptation of Standard-Costing Systems Applications of standard costing have adapted to changes in](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-66.jpg)
66 Adaptation of Standard-Costing Systems Applications of standard costing have adapted to changes in the manufacturing environment and the resulting criticisms leveled at standard costing. Automation Reduces labor efficiency variance Reduces variation in quality and increases quality Reduces material quantity variance
![67 Adaptation of StandardCosting Systems Applications of standard costing have adapted to changes in 67 Adaptation of Standard-Costing Systems Applications of standard costing have adapted to changes in](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-67.jpg)
67 Adaptation of Standard-Costing Systems Applications of standard costing have adapted to changes in the manufacturing environment and the resulting criticisms leveled at standard costing. Shorter product life cycles Non-financial measures such a delivery times are more important More frequent benchmarking More frequent revisions of standard costs Elimination of non-valueadded costs Real-time information systems provide more timely variance reports
![68 Learning Objective 9 68 Learning Objective 9](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-68.jpg)
68 Learning Objective 9
![69 l Comparing Standard Costing and Kaizen Costing Standard costing the use of 69 l Comparing Standard Costing and Kaizen Costing Standard costing – the use of](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-69.jpg)
69 l Comparing Standard Costing and Kaizen Costing Standard costing – the use of carefully predetermined product costs for budgeting and performance evaluation. l l Standard costs are typically used in established production processes. Kaizen costing – the emphasis is on continuous reduction of production costs. l Rather than standards or targets, the goal is current costs that are less than previous costs.
![Kaizen Costing Current year cost base Cost per product unit 70 Exh 16 7 Kaizen Costing Current year cost base Cost per product unit 70 Exh. 16 -7](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-70.jpg)
Kaizen Costing Current year cost base Cost per product unit 70 Exh. 16 -7 Kaizen goal: cost reduction rate Kaizen goal: cost reduction amount Actual cost reduction achieved Actual cost performance of the current year 12/31/x 0 Cost base for next year 12/31/x 1 Time
![71 Learning Objective 10 71 Learning Objective 10](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-71.jpg)
71 Learning Objective 10
![72 Production Mix and Yield Variances l l l Nearly all production processes require 72 Production Mix and Yield Variances l l l Nearly all production processes require](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-72.jpg)
72 Production Mix and Yield Variances l l l Nearly all production processes require multiple materials and labor inputs. A summary quantity variance for materials and labor would hide the individual effects of these inputs. The quantity variances can be analyzed into two further variances: l l l Mix (the difference between actual and standard input proportions) Yield (the difference between actual and standard input used) The analysis assumes, of course, that the inputs can be substituted for each other.
![73 End of Chapter 16 73 End of Chapter 16](https://slidetodoc.com/presentation_image_h/a6e50a2346bb6acf495dd7a488def116/image-73.jpg)
73 End of Chapter 16
Difference between kaizen costing and standard costing
Flexible budget formula
Idle time meaning in cost accounting
Standard cost variance
Standard costing formulas
Standard costs meaning
Introduction to cost accounting ppt
Variance and standard deviation formula
Range variance and standard deviation
Measures of dispersion standard deviation
Numerical descriptive statistics
Normal distribution math is fun
Difference between service costing and output costing
Were the jobs overcosted or undercosted? by how much?
Contract costing definition
Job order cost and process cost systems
Process costing and hybrid product-costing systems
Wip control account
Conversion cost formula
Process costing and hybrid product-costing systems
Job order costing and process costing are
Marginal costing and absorption costing
Target costing and activity based costing
Job order costing
Job costing vs process costing examples
Companies that use job order costing
Job order costing and process costing
Variance vs standard deviation
Root cause analysis kaizen
6 step kaizen process
Is the central theme of kaizen
Absorption costing vs marginal costing
Variable costing vs absorption costing
How to calculate margin of safety
Advantages of activity based costing
Advantages of activity based costing
Activity based costing vs job costing
Perbedaan full costing dan variable costing
Objectives of job costing
Contoh full costing dan variable costing
Job costing with process costing
Multivariate analysis of variance and covariance
Flexible budget variance formula
Analysis of variance and covariance
Static budget variance
The variance analysis cycle:
What is a static budget
Multivariate analysis of variance example
Direct materials variance
Job cost variance
Mixed analysis of variance
Variance analysis in nursing
Introduction to analysis of variance
Manufacturing cost variance
Variance analysis
Analysis of variance
Standard costing system
Standard costing reconciliation statement
Standardized recipe cost sheet
Standard recipe costing
Standard error formula
What language you speak at home
Kanban kaizen
Inventory costing and capacity analysis
Chapter 9 inventory costing and capacity analysis
Chapter 9 inventory costing and capacity analysis
Marginal costing and break even analysis
Dskp bahagian pembangunan kurikulum
Starbucks lean management
Kaizen optimizer
Goat kaizen
Kaizen burst
Kaizen evaluation
In the box