Question

13. Define standard cost and when are they used?

14. What is a budget performance report and what does it show?

15. Define cost variance and the components of materials (price/qty), labor (rate/efficiency), and overhead (volume/controllable) variances.

Answer 1

13. Standard cost is the pre determined operating cost calculated from managemnet's standards of efficient operations and relevant necessary expenditures.it is the planned unit of cost of the product or service produced in a period.

uses - 1. in planning and control 2. pricing decisions 3. variance analysis 4. management by exception

14. Budget performance report is  often used reports in addition to budgets to provide managers with additional information relating to budget variances. This additional information may relate to financial or non-financial issues that cause the budget to go outside its allowable range.

it shows  you additional information related to budget variances.

15. cost variance is difference between cost actually incurred and the budgeted cost that should have been incurred.

components of material variance - material yield variance, material mix variance , material price variance, material usage variance and total cost variance.

components of labour variance - labour efficiency variance, labour idle time variance,labour mix variance, material rate variance and total labour cost variance

components of overhead variance - OH efficiency variance, OH expenditure variance, Oh volume variance and OH cost variance

15.