Analisis Dan Estimasi Biaya Pertemuan 12

Standard Costing
©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 8-1
Learning Objective 1
Explain in what ways the

planning of variable overhead
costs and fixed overhead
costs are similar and in
what ways they differ.
Planning of Variable and
Fixed Overhead Costs
Effective planning of variable overhead costs
involves undertaking only those variable
overhead activities that add value for
customers using the product or service.
The key challenge with planning fixed overhead
is choosing the appropriate level of capacity or
investment that will benefit the company over
an extended time period.
Identify the features of

a standard-costing system.
Standard Costing
Direct Cost Cost Object
Standard input
Standard cost
per input unit × allowed for
one output unit
Developing Budgeted Variable
Overhead Allocation Rates
Step 1:
Choose the time period used to compute the budget.
Pasadena Co. uses a twelve-month budget period.
Step 2:
Select the cost-allocation base. Pasadena budgets
26,000 labor-hours for a budgeted output of
13,000 suits in year 2004.
Step 3:
Identify the variable overhead costs.
Pasadena’s budgeted variable
manufacturing costs for 2004 are $312,000.
Step 4:
Compute the rate per unit of
each cost-allocation base.
$312,000 ÷ 26,000 hours = $12/hour
What is the budgeted variable overhead

cost rate per output unit (dress suit)?
2.00 hours allowed per output unit × $12
budgeted variable overhead cost rate per
input unit = $24 per suit (output unit)
Compute the variable overhead

efficiency variance and
the variable overhead
spending variance.
Variable Overhead
Cost Variances
The following data are for 2004 when

Pasadena produced and sold 10,000 suits:
Output units: 10,000
Labor-hours:
Actual results: 21,500
Flexible-budget amount: 20,000
©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 8 - 10

Variable Overhead
Cost Variances
Labor-hours per output unit:

Actual results: 21,500 ÷ 10,000 = 2.15
Flexible-budget amount: 20,000 ÷ 10,000 = 2.00
Variable manufacturing overhead costs:
Actual results: $244,775
Flexible-budget amount: $240,000

Variable Overhead
Cost Variances
Variable manufacturing overhead

cost per labor-hour:
Actual results:
$244,775 ÷ 21,500 = $11.3849
Flexible-budget amount:
$240,000 ÷ 20,000 = $12.00

Variable Overhead
Cost Variances
Variable manufacturing overhead

cost per output unit:
Actual results:
$244,775 ÷ 10,000 = $24.4775
Flexible-budget amount:
$240,000 ÷ 10,000 = $24.00

Flexible-Budget Analysis
The variable overhead flexible-budget variance

measures the difference between the actual
variable overhead costs and the flexible-budget
variable overhead costs.
Actual results: $244,775
– Flexible-budget amount $240,000 = $4,775 U

Budgeted Inputs
Actual
Allowed for Actual
Costs Incurred
Outputs at Budgeted Rate
21,500 × $11.3849
20,000 × $12.00
= $244,775
= $240,000
$4,775 U
Flexible-budget variance
Actual Quantity Budgeted Inputs
of Inputs at Allowed for Actual
Budgeted Rate Outputs at Budgeted Rate
21,500 × $12.00 20,000 × $12.00
= $258,000 = $240,000
$18,000 U
Variable overhead efficiency variance
Actual Actual Quantity
Costs of Inputs at
Incurred Budgeted Rate
21,500 × $11.3849 21,500 × $12.00
= $244,775 = $258,000
$13,225 F
Variable overhead spending variance
Variable Overhead Variances
$4,775 U
Efficiency variance Spending variance

$18,000 U $13,225 F

Explain how the efficiency variance

for a variable indirect-cost item
differs from the efficiency variance
for a direct-cost item.

Efficiency Variance
In the Pasadena Co.’s example, the 21,500 actual
direct manufacturing labor-hours are 7.5% greater
than the flexible-budget amount of 20,000 direct
manufacturing labor-hours.
(21,500 – 20,000) ÷ 20,000 = 7.5%
Actual variable overhead costs of $244,775
are only 2% greater than the flexible-budget
amount of $240,000.
Efficiency Variance
Because actual variable overhead costs increase

less than labor-hours, the actual variable
overhead cost per labor-hour ($11.3849) is
lower than the budgeted amount ($12.00).
The key cause for Pasadena’s unfavorable
efficiency variance is the higher-than-budgeted
labor-hours used.
Compute a budgeted
fixed overhead cost rate.

Developing Budgeted Fixed
Step 1:
Choose the time period used to compute the budget.
The budget period is typically twelve months.
Step 2:
Select the cost-allocation base.
Pasadena budgets 26,000 labor-hours for a budgeted
output of 13,000 suits in year 2004.
Step 3:
Identify the fixed overhead costs. Pasadena’s fixed
manufacturing budget for 2004 is $286,000.
Step 4:
Compute the rate per unit of each
cost-allocation base. $286,000 ÷ 26,000 = $11

What is the budgeted fixed overhead cost rate
per output unit (dress suit)?
2.00 hours allowed per output unit
×
$11 budgeted fixed overhead cost rate per input unit
=
$22 per suit (output unit)
Flexible-Budget Variance
Flexible Budget:
Actual Costs
Budgeted
Incurred – Fixed Overhead
$300,000
$286,000
$14,000 U
Fixed overhead spending variance
Fixed overhead flexible-budget variance
Production-Volume Variance
Flexible Budget: Fixed Overhead Allocated Using
Budgeted Budgeted Input Allowed for
Fixed Overhead
– Actual Output Units Produced
$286,000 $220,000
$66,000 U
Production-volume variance
10,000 × 2.00 × $11 = $220,000
Fixed Overhead Variances
Fixed overhead variance

$80,000 U
Volume variance Spending variance

$66,000 U $14,000 U

Explain two concerns

when interpreting the
production-volume variance
as a measure of the economic
cost of unused capacity.
Interpreting the Production-
Volume Variance
Management
Management may may Production
Production volume
volume
have
have maintained
maintained some
some variance
variance focuses
focuses
extra
extra capacity.
capacity. only
only on
on costs.
costs.
This
This variance
variance results
results from
from “unitizing”
“unitizing” fixed
fixed costs.
costs.

Interpreting the Production-
Volume Variance
Had
Had Pasadena
Pasadena manufactured
manufactured
13,000
13,000 suits
suits instead
instead of
of 10,000,
10,000,
allocated
allocated fixed
fixed overhead
overhead
would
would have
have been
been == $286,000
$286,000
(13,000
(13,000 ×× 2.00
2.00 ×× $11).
$11).
No
No production-volume
production-volume variance
variance
would
would have
have occurred.
occurred.
Show how the 4-variance

analysis approach reconciles
the actual overhead incurred
with the overhead amounts
allocated during the period.
Integrated Analysis
A 4-variance analysis presents spending and

efficiency variances for variable overhead
costs and spending and production-volume
variances for fixed overhead costs.
Managers can reconcile the actual overhead
costs with the overhead amounts allocated
during the period.

Integrated Analysis
Actual variable Flexible budget:
overhead costs budgeted inputs
incurred
– allowed × budgeted rate
$244,775 $240,000
$4,775 U
Underallocated variable overhead
Integrated Analysis
Actual variable Actual inputs
overhead costs ×
incurred – budgeted rate
$244,775 $258,000
Variable overhead
spending variance
$13,225 F
Integrated Analysis
Actual inputs Flexible budget:
× budgeted inputs
budgeted rate – allowed × budgeted rate
$258,000 $240,000
Variable overhead
efficiency variance
$18,000 U
Integrated Analysis
Actual fixed Budgeted fixed
overhead costs overhead
incurred – costs
$300,000 $286,000
Fixed overhead
spending variance
$14,000 U
Integrated Analysis
Budgeted fixed Budgeted inputs allowed
overhead ×
costs – budgeted rate
$286,000 $220,000
Volume variance
$66,000 U

Integrated Analysis
Actual manufacturing overhead incurred:
Variable manufacturing overhead $244,775
Fixed manufacturing overhead 300,000
Total $544,775
Overhead allocated:
Variable manufacturing overhead $240,000
Fixed manufacturing overhead 220,000
Total $460,000
Amount underallocated $ 84,775
Integrated Analysis
4-Variance Analysis:
Variable manufacturing overhead:
Spending variance $13,225 F
Efficiency variance 18,000 U
Fixed manufacturing overhead:
Spending variance 14,000 U
Volume variance 66,000 U
Total $84,775 U

Integrated Analysis
3-Variance Analysis
Variable and fixed manufacturing overhead:
Spending variance
$13,225 F + $14,000 U = $ 775 U
Fixed manufacturing overhead:
Volume variance 66,000 U
Total $84,775 U
Integrated Analysis
2-Variance Analysis
Variable and fixed manufacturing overhead:
Spending variance $ 775 U
Flexible-budget variance: $18,775 U
Fixed manufacturing overhead
Volume variance: 66,000 U
Total $84,775 U
Different Purposes of
Overhead Cost Analysis
The greater the number of output units

manufactured, the higher the budgeted
total variable manufacturing overhead
costs and the higher the total variable
manufacturing overhead costs
allocated to output units.

Different Purposes of
Overhead Cost Analysis
Every output unit that Pasadena manufactures

will increase the fixed overhead allocated
to products by $22.
Managers should not use this unitization of
fixed manufacturing overhead costs for
planning and control.

Journal Entries for Overhead
Costs and Variances
What is the journal entry to record variable

manufacturing overhead?
Variable Manufacturing
Overhead Control 244,775
Accounts Payable 244,775
To record actual variable manufacturing overhead
costs incurred

Costs and Variances
What is the journal entry to allocate variable
Work in Process Control 240,000
Overhead Allocated 240,000
To record variable manufacturing overhead cost
allocated: (2.00 × 10,000 × $12)
What is the journal entry to isolate variances?
Costs and Variances
Variable Overhead
Efficiency Variance 18,000
Variable Overhead
Spending Variance 13,225
To isolate variances for the accounting period
Costs and Variances
What is the journal entry to record fixed

Fixed Manufacturing
Accumulated
Depreciation, etc. 300,000
To record actual fixed manufacturing
overhead costs incurred
Costs and Variances
What is the journal entry to allocate fixed
Work in Process Control 220,000
Fixed Manufacturing
To record fixed manufacturing overhead cost
allocated: (2.00 × 10,000 × $11)
What is the journal entry to isolate variances?
Costs and Variances
Fixed Manufacturing
Fixed Overhead
Spending Variance 14,000
Fixed Overhead
Volume Variance 66,000
Fixed Manufacturing
To isolate variances for the accounting period
Financial and Nonfinancial
Performance
Overhead variances are examples of financial

performance measures.
What are examples of nonfinancial measures?
Actual labor time, relative to budgeted time
Actual indirect materials usage per labor-hour,
relative to budgeted indirect materials usage

Activity-Based Costing and
Variance Analysis
ABC systems classify costs of various activities

into a cost hierarchy (output-unit level, batch
level, product sustaining, and facility sustaining).
The basic principles and concepts for variable
and fixed manufacturing overhead costs can
be extended to ABC systems.

DISCUSSION

Analisis Dan Estimasi Biaya Pertemuan 12

Uploaded by

Copyright:

Available Formats

Analisis Dan Estimasi Biaya Pertemuan 12

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Analisis Dan Estimasi Biaya Pertemuan 12

Uploaded by

Copyright:

Available Formats

Standard Costing

Explain in what ways the

Identify the features of

Direct Cost Cost Object

What is the budgeted variable overhead

Compute the variable overhead

The following data are for 2004 when

©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 8 - 10

Labor-hours per output unit:

©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 8 - 11

Variable manufacturing overhead

©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 8 - 12

Variable manufacturing overhead

©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 8 - 13

The variable overhead flexible-budget variance

©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 8 - 14

Efficiency variance Spending variance

©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 8 - 18

Explain how the efficiency variance

©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 8 - 19

Because actual variable overhead costs increase

©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 8 - 22

©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 8 - 24

Fixed overhead variance

Volume variance Spending variance

©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 8 - 28

Explain two concerns

©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 8 - 30

Show how the 4-variance

A 4-variance analysis presents spending and

©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 8 - 33

©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 8 - 38

©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 8 - 40

The greater the number of output units

©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 8 - 43

Every output unit that Pasadena manufactures

©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 8 - 44

What is the journal entry to record variable

©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 8 - 45

What is the journal entry to record fixed

Overhead variances are examples of financial

©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 8 - 51

ABC systems classify costs of various activities

©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 8 - 53

©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster 8 - 54

You might also like