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Variances

Variances indicate differences between actual and planned performance. Standard costs establish price and quantity amounts for inputs and are used to calculate variances. Standard cost sheets include the standard cost per unit, standard price, and standard quantity for inputs.

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Rosemarie Cruz
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60 views2 pages

Variances

Variances indicate differences between actual and planned performance. Standard costs establish price and quantity amounts for inputs and are used to calculate variances. Standard cost sheets include the standard cost per unit, standard price, and standard quantity for inputs.

Uploaded by

Rosemarie Cruz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Variances indicate

that actual performance is not going according to plan.

The unit standard cost is

.The product of the standard price times the standard quantity for each unit.

Price standards are the responsibility

accounting, purchasing, personnel

Quantity price standards a. are standard price multiplied by standard quantity

specify how much should be paid for the quantity of input to be used.

The standard cost sheet includes all of the following

the standard cost per unit, the standard price, the standard quantity per unit.

Standard costing

establishes price and quantity standards for inputs

Diaz Company has developed the following standards for one of its products: Direct materials 3.50
pounds × $4 per pound Direct labor 1 hour × $12 per hour Variable manufacturing overhead 1 hour × $6
per hour The following activity occurred during the month of April: Materials purchased 2,000 pounds
costing $22,500 Materials used 1,600 pounds Units produced 250 units Direct labor 550 hours at $12.50
per hour Actual variable manufacturing overhead: $2,500 The company records materials price
variances at the time of purchase. The total variable standard cost is
$8,000

SUPPORTING CALCULATIONS: Direct materials (3.50 pounds × $4) $14.00 Direct labor (1 hour × $12)
12.00 Variable overhead (1 hour × $6) 6.00 Variable standard cost per unit $32.00 Total variable
standard cost (250 units × $32) $8,000

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