Kế toán, kiểm toán - Chapter 29: Controlling manufacturing costs: standard costs

1-*McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.Controlling ManufacturingCosts: Standard Costs Section 1: Cost Behavior and the BudgetSection ObjectivesExplain how fixed, variable, and semivariable costs change as the level of manufacturing activity changes.Use the high-low point method to determine the fixed and variable components of a semivariable cost.Prepare a fixed budget for manufacturing costs.Develop a flexible budget for manufacturing costs.Chapter29Variable Costs Variable costs vary in total in direct proportion  to the changes in the level of activity. Direct materials and direct labor are examples  of variable costs. Direct Materials 1 unit = $ 5 1,000 units = $ 5,000 4,000 units = $20,000 The total variable cost change, but the cost  per unit does not change.Fixed Costs Fixed costs do not change in total as the total level  of activity changes. Although fixed costs do not change in total as the  level of activity changes, the cost per unit does  change. Factory Supervisory Salaries Units Produced Cost Per Unit $10,000/month 2,000 $5.00 $10,000/month 2,500 $4.00Semivariable CostsSemivariable costs vary with, but not in direct proportion to, the volume of activity.Utilities are an example of a semivariable cost:Fixed portionUsage will vary in proportion to level of production.Variable portionNeeded no matter how many units produced.Step 1. Determine the production and cost data for the months  of highest and lowest production during the past year.Step 2. Compute the difference in direct labor hours, and the  difference in utilities costs, in the months of highest  and lowest production.Step 3. Compute the variable cost per direct labor hour. Semivariable expense: utilitiesDifference in utilities costs ÷ Difference in direct labor hoursStep 4. Compute the fixed cost for a month.Total cost – (direct labor hours x cost per direct labor hour) High-Low Point MethodFixed Budget of Manufacturing CostsShows one level of activity – 1,000 direct labor hours Prepare a fixed budget for manufacturing costsObjective 3Highlights differences between budgeted and actual amountsBudget Performance Report Used when the level of activity fluctuates from month to month.Shows fixed and variable costs separately.Flexible BudgetThe different levels of activity are called the relevant range of activityBudget Performance ReportCompares overhead expenses at an actual activity level of 960 hoursControlling ManufacturingCosts: Standard Costs Section 2: Standard CostsAs a Control ToolChapter29Section ObjectivesDevelop standard costs per unit of product.Compute the standard costs of products manufactured during the period and determine cost variances between actual costs and standard costs.Compute the amounts and analyze the nature of variances from standard for raw materials, labor, and manufacturing overhead.Reflect what costs should be per unit under normal, efficient operating conditions.Used to measure the effectiveness of operations.Should be set at an achievable level.Standards are set for each cost element, including materials, labor, and overhead Develop standard costs per unit of productObjective 5Standard CostsStandard Quantity: Number of units of each type of raw material required to manufacture one unit of finished product.Standard Cost: Cost of each unit of raw material required to make the product.Raw Materials StandardRaw Materials Standard = Standard Quantity x Standard CostStandard Quantity: Number of hours of each type of labor needed to manufacture one unit of finished product.Standard Cost: Cost of each type of labor used to make the product.Direct Labor StandardDirect Labor Standard = Standard Quantity x Standard CostThe standard overhead cost per unit of product is usually based on the overhead application rate used to assign overhead costs to products.Overhead application rate can be based on:Direct labor cost,Direct labor hours, orSome other measure.Standard Overhead CostComparing Actual and Standard CostsCompute the variance:Materials VarianceLabor VarianceManufacturing Overhead VarianceVariances Between Standard and Actual CostsMaterials VarianceMaterials Quantity Variance:Results from a difference between the actual quantity of materials consumed and the standard quantity allowed for the job.Formula:Materials Price Variance:Results from a difference between the actual cost and the standard cost allowed.Formula: (Actual Quantity – Standard Quantity) x Standard Cost (Actual Cost – Standard Cost) x Actual Quantity Labor VarianceLabor Time Variance:Results from a difference between the actual hours worked and the standard labor hours allowed for the job.Formula:Labor Rate Variance:Results from a difference between the actual labor rate per hour and the standard labor rate per hour.Formula:(Actual Hours – Standard Hours) x Standard Rate(Actual Rate – Standard Rate) x Actual Hours Applied overhead and standard overhead are  analyzed to determine the variance. Because it is difficult to determine actual  overhead for individual jobs, the overhead  variance analysis is usually based on the total  actual overhead and total standard overhead  for the products manufactured.Manufacturing Overhead Variances