1. Standard Costing 标准成本法 -- A Managerial Control Tool
CHAPTER 9

2. Objectives
1. Tell how unit standards are set and why standard costing systems are adapted.
2. State the purpose of a standard cost sheet.
3. Describe the basic concepts underlying variance analysis, and explain when variances should be investigated.
4. Compute the material and labor variances, and explain how they are used for control.

3. Objectives
5. Calculate the variable and fixed overhead variances, and give their definitions.
6. Appendix: Prepare journal entries for materials and labor variances, and show how to account for overhead variances.

4. 一、Why Standard Cost Systems Are Adopted
Standard costing systems enhance planning and control and improve performance measurement.
Standard costing systems facilitate product costing.

5. 例：Standard Cost Sheet for Corn Chips玉米片
Standard Standard Standard
Price Usage Cost Subtotal
Description
Direct materials:
Yellow corn $ oz. $0.108
Cooking oil oz
Salt oz
Lime酸橙 oz
Bags bag
Total direct materials $0.223

6. 例：Standard Cost Sheet for Corn Chips
Standard Standard Standard
Price Usage Cost Subtotal
Description
Direct materials $0.223
Direct labor:
Inspectors $ hr. $0.049
Machine operators hr
Total direct labor
Overhead:
Variable overhead hr. $0.030
Fixed overhead hr
Total overhead
Total standard unit cost $0.560

7. During the first week, 100000 packages of corn chips are produced.
The standard quantity of yellow corn meal: 18 ounces/per package

8. Standard Quantity of Materials Allowed Standard Hours Allowed
SQ = Unit quantity standard x Actual output
= 18 x 100,000
= 1,800,000 ounces
Standard Hours Allowed
SH = Unit labor standard x Actual output
= x 100,000
= 80 direct labor hours

9. Total variance= (AP x AQ) – (SP x SQ)
= (AP x AQ) – (SP x AQ)]+ (SP x AQ) – (SP x SQ)
= [(AP x AQ) – (SP x AQ)]+[(SP x AQ)–(SP x SQ)]
= (AP – SP)AQ + (AQ – SQ)SP
= Price variance + Usage variance

10. Favorable有利 variances occur whenever the opposite occurs.
Unfavorable不利 variances occur whenever actual prices or usage of inputs are greater than standard prices or usage.
Favorable有利 variances occur whenever the opposite occurs.

11. Control Chart
Cost x
$110,000
$100,000
$ 90,000
Time

12. 二、Variance Analysis: Materials and Labor
Actual production 48,500 bags of corn chips
Actual cost of corn 780,000 ounces of $ = $5,382
Actual cost of inspection labor 360 hours at $7.35 = $2,646
Actual Costs Budgeted Costs Total Variance
Corn $5, $5, $ U
Inspection labor 2, , U

13. Variance Analysis: 1.Columnar Approach分栏法
AQ x AP 780,000 x $5,382
AQ x SP
780,000 x $
$4,680
SQ x SP
873,000 x $0.0060
$5,238
$702 U不利的
Price Variance
价格差异
$558 F有利的
Usage Variance
用量差异
$144 U不利
Total Variance
p256

14. Variance Analysis: 2.Formula Approach公式法
1) Material Price Variance价格差异
MPV = (AP – SP)AQ
The actual price per unit
The standard price per unit
The actual quantity of material used

15. Material Price Variance
MPV = (AP – SP)AQ
= ($ – $0.0060)780,000
= $ x 780,000
= $702 U
Percent of SP x AQ = $702/$4,680 = 15%

16. MUV = (AQ – SQ)SP 2) Direct Materials Usage用量 Variance
The actual quantity of materials used
The standard quantity of materials allowed for the actual output
The standard price per unit

17. Direct Materials Usage Variance
MUV = (AQ – SQ)SP
= (780,000 – 873,000)($0.006)
= 93,000 x $0.006
= $558 F
Percent of SQ x SP = $558/$5,238 = 10.7%

18. LRV = (AR – SR)AH 3) Labor Rate工资率 Variances
The actual hourly wage rate
The standard hourly wage rate
The actual direct labor hours used

19. Percent of SR x AH = $126/$2,520 = 5%
Labor Rate Variances
LRV = (AR – SR)AH
= ($7.35 – $7.00)360
= $0.35 x 360
= $126 U
Percent of SR x AH = $126/$2,520 = 5%

20. Labor Variances: Columnar Approach
AH x AR
360 x $735
$2,646
AH x SR
360 x $7.00
$2,520
SH x SR
339.5 x $7.00
$2,376.50
$126 U
Rate Variance
$ U
Efficiency Variance
$ U
Total Variance

21. LEV = (AH – SH) SR 4) Labor Efficiency Variances 261
The actual direct labor hours used
The standard direct labor hours that should have been used
The standard hourly wage rate

22. Percent of SH x SR = $143.50/$2,376.50 = 6%
Labor Efficiency Variances
LEV = (AH – SH)SR
= (360 – 339.5)$7
= 20.5 x $7
= $ U
Percent of SH x SR = $143.50/$2, = 6%

23. 5)Variable Overhead Variances 262
Variable overhead rate (standard) $3.85/DLH
Actual variable overhead costs $1,600 Actual hours worked 400
Bags of chips produced 48,500
Hours allowed for production 373.3
Applied variable overhead $1,456

24. Variable Overhead Variances
Actual VO
$1,600
VO Rate x Actual Hours
$1,540
VO Rate x Standard Hours
$1,456
$60 U
Spending Variance
$84 U
Efficiency Variance
$144 U
Total Variance

25. VOSV = (AVOR x AH) – (SVOR x AH)
Variable Overhead Spending Variances耗用差异
VOSV = (AVOR x AH) – (SVOR x AH)
= (AVOR – SVOR)AH
= ($4.00 – $3.85)400
= $60 U

26. Flexible Budget Performance Report For the Week Ended March 8, 2006
Crunchy Chips, Inc.
Flexible Budget Performance Report
For the Week Ended March 8, 2006
Cost Formula*
Actual Costs
Spending Variance
Budget**
Gas $3.00 $1,190 $1,200 $10 F
Electricity U
Water F
Total cost $3.85 $1,600 $1, $60 U
* Per DL hour
** 3.00*400(直接人工工时)

27. For the Week Ended March 8, 2006
Crunchy Chips, Inc.
Performance Report
For the Week Ended March 8, 2006
Budget for Standard Hours
Cost Formula
Actual Costs
Spending Variance
EfficiencyVariance
Budget
Gas $3.00 $1,190 $1,200 $10 F
Electricity U
Water F
Total cost $3.85 $1,600 $1, $60 U
$1,135* $65 U U U
$1,456 $84 U
* 3.00x387.3 (标准工时)

28. 6）Fixed Overhead Variances
图9-2 for Corn Chips
Standard Standard Standard
Price Usage Cost Subtotal
Description
Direct materials $0.223
Direct labor:
Inspectors $ hr. $0.049
Machine operators hr
Total direct labor
Overhead:
Variable overhead hr. $0.030
Fixed overhead hr
Total overhead
Total standard unit cost $0.560

29. 6）Fixed Overhead Variances
Budgeted or Planned Items
Budgeted预计的fixed overhead总数 $749,970
Budgeted work activity 23,400 direct labor hours
Standard fixed overhead rate标准分配率 $32.05
Hours allowed to produce 3,000,000 bags of chips: 0.078*3,000,000
Actual Results 实际
Actual units of products completed实际产量 2,750,000 bags
Actual total fixed overheads(实际总FO) $749,000
Standard hours allowed for actual production 21,450

30. Total Fixed Overhead Variances
Actual fixed overhead cost总数 $749,000
Applied已分配的 fixed overhead
Standard fixed overhead rate * Standard hours =
= $32.05 * 21,450
= $687,473 (rounded四舍五入)
Total fixed overhead variance
$749,000 – $687,473 =
= $61,527 (underapplied少分配)

31. Fixed Overhead Variances analysis:
Actual FO
$749,000
Budgeted FO
$749,970
Applied FO
已分配
$687,473
$970 F
Spending耗费Variance
$62,497 U
Volume产量 Variance
$61,527 U
Total Variance
总差异

32. FO的 Spending Variance分析 Performance Report业绩报告
逐项比较： Crunchy Chips, Inc.
Performance Report业绩报告
For the Year Ended 2006
Fixed Overhead Items
Actual Costs
Budgeted Cost
Variance
Depreciation折旧 $530,000 $530,000 $ ----
Salaries管理人员工资 159, , F
Taxes 税金 50,500 50, U
Insurance 保费 , , F
Total fixed overhead $749,000 $749, $970 F

33. FO的Volume Variance分析
Volume variance occurs whenever the actual production volume is different from the expected volume. (p267, 271)
Volume variance = 预计的FO – 已分配的FO
= ($32.05 * 23,400) – ($32.05 * 21,450)
= 标准FO分配率*(预计作业工时-标准工时)
= $749,970 – $687,473
= Budgeted fixed overhead – Applied fixed overhead
= 预计的FO – 已分配的FO = $62,497 U
注:32.05=0.25/0.0078=预计的单位FO÷ 预计单位直接人工工时
=749,970/23,400=Budgeted FO ÷ budgeted DL hours总数 = $32.05*(23,400 – 21,450)

34. Financial Accounting for Variances
Appendix
Financial Accounting for Variances

35. The actual price is $ per ounce of corn and standard price is $0.0060, and 780,000 ounces of corn are purchased.
Materials Inventory
Materials Price Variance
The receiving report and the invoice are used to record the receipt of the merchandise and to control the payment.
Accounts Payable
存货入账时按standard costs(而非actual costs)
另设置”Material Price Variance”科目记录差异。

36. Material Usage Variance
During the period 780,000 ounces of corn is placed into production. The standard quantity is 873,000 ounces, and standard price is $0.006.
Work in Process
Materials Usage Variance
The receiving report and the invoice are used to record the receipt of the merchandise and to control the payment.
Materials Inventory
Material Usage Variance

37. During the period the firm has 360 actual inspection hours, while the standard hours for the units produced is hours. The actual rate is $7.35 per hour while the standard rate is $7.00 per hour.
Work in Process
Labor Efficiency Variance
Labor Rate Variance
The receiving report and the invoice are used to record the receipt of the merchandise and to control the payment.
Accrued Payroll
Labor Variances

38. At the end of the year, the variances for materials and labor are usually closed to Cost of Goods Sold.
Cost of Goods Sold
Material Price Variance
Labor Efficiency Variance
Labor Rate Variance
The receiving report and the invoice are used to record the receipt of the merchandise and to control the payment.
Closing Variances

39. At the end of the year, the variances for materials and labor are usually closed to Cost of Goods Sold.
Material Usage Variance
Cost of Goods Sold
The receiving report and the invoice are used to record the receipt of the merchandise and to control the payment.
Closing Variances

40. Chapter Nine
The End