Variance Analysis Chapter 8. Material Costs Total Quantity X price Total Quantity = good units X...
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Transcript of Variance Analysis Chapter 8. Material Costs Total Quantity X price Total Quantity = good units X...
![Page 1: Variance Analysis Chapter 8. Material Costs Total Quantity X price Total Quantity = good units X Standard Qty per unit.](https://reader035.fdocuments.us/reader035/viewer/2022062722/56649f2f5503460f94c49799/html5/thumbnails/1.jpg)
Variance AnalysisVariance AnalysisChapter 8
![Page 2: Variance Analysis Chapter 8. Material Costs Total Quantity X price Total Quantity = good units X Standard Qty per unit.](https://reader035.fdocuments.us/reader035/viewer/2022062722/56649f2f5503460f94c49799/html5/thumbnails/2.jpg)
Material CostsMaterial Costs
Total Quantity X price
Total Quantity =good units X Standard Qty per unit
![Page 3: Variance Analysis Chapter 8. Material Costs Total Quantity X price Total Quantity = good units X Standard Qty per unit.](https://reader035.fdocuments.us/reader035/viewer/2022062722/56649f2f5503460f94c49799/html5/thumbnails/3.jpg)
Labor CostsLabor Costs
Total Hours X Rate per hr
Good units X hours per unit = total hrs
![Page 4: Variance Analysis Chapter 8. Material Costs Total Quantity X price Total Quantity = good units X Standard Qty per unit.](https://reader035.fdocuments.us/reader035/viewer/2022062722/56649f2f5503460f94c49799/html5/thumbnails/4.jpg)
Material VariancesMaterial VariancesPrice VarianceQuantity Variance
Favorable variance is positive number
Unfavorable variance is a negative num.
![Page 5: Variance Analysis Chapter 8. Material Costs Total Quantity X price Total Quantity = good units X Standard Qty per unit.](https://reader035.fdocuments.us/reader035/viewer/2022062722/56649f2f5503460f94c49799/html5/thumbnails/5.jpg)
Price VariancePrice VarianceDifference in Price X Actual
Quantity
Difference in Price is:◦Standard Price – Actual Price
Actual Price is Total Cost/Quantity
![Page 6: Variance Analysis Chapter 8. Material Costs Total Quantity X price Total Quantity = good units X Standard Qty per unit.](https://reader035.fdocuments.us/reader035/viewer/2022062722/56649f2f5503460f94c49799/html5/thumbnails/6.jpg)
Quantity VarianceQuantity VarianceDifference in Quantity X Standard
Price
Difference in Quantity◦Standard Quantity – Actual Quantity
◦Exercise 8-4 Page 368◦Worksheet
![Page 7: Variance Analysis Chapter 8. Material Costs Total Quantity X price Total Quantity = good units X Standard Qty per unit.](https://reader035.fdocuments.us/reader035/viewer/2022062722/56649f2f5503460f94c49799/html5/thumbnails/7.jpg)
Direct Labor VariancesDirect Labor VariancesRate VariancesEfficiency (Hours) Variance
![Page 8: Variance Analysis Chapter 8. Material Costs Total Quantity X price Total Quantity = good units X Standard Qty per unit.](https://reader035.fdocuments.us/reader035/viewer/2022062722/56649f2f5503460f94c49799/html5/thumbnails/8.jpg)
Rate VariancesRate VariancesDifference in rate X Actual hours
Difference is Standard Rate – Actual Rate
![Page 9: Variance Analysis Chapter 8. Material Costs Total Quantity X price Total Quantity = good units X Standard Qty per unit.](https://reader035.fdocuments.us/reader035/viewer/2022062722/56649f2f5503460f94c49799/html5/thumbnails/9.jpg)
Efficiency VarianceEfficiency VarianceDifference in hours x Standard
rateDifference = Standard hour from
Actual Hours
Exercise 8-5 Page 368
![Page 10: Variance Analysis Chapter 8. Material Costs Total Quantity X price Total Quantity = good units X Standard Qty per unit.](https://reader035.fdocuments.us/reader035/viewer/2022062722/56649f2f5503460f94c49799/html5/thumbnails/10.jpg)
TruismsTruismsLower Price – Lower Quality-
more quantity – more hoursHigher price-higher quality-less
quantity-less hoursHigher skilled labor-requires less
hours-higher rateLower skill labor-requires more
hours-lower rate
![Page 11: Variance Analysis Chapter 8. Material Costs Total Quantity X price Total Quantity = good units X Standard Qty per unit.](https://reader035.fdocuments.us/reader035/viewer/2022062722/56649f2f5503460f94c49799/html5/thumbnails/11.jpg)
Other reasons for Other reasons for variancesvariancesQuantity DiscountQuality better or worseStandard do not reflect current
changes
![Page 12: Variance Analysis Chapter 8. Material Costs Total Quantity X price Total Quantity = good units X Standard Qty per unit.](https://reader035.fdocuments.us/reader035/viewer/2022062722/56649f2f5503460f94c49799/html5/thumbnails/12.jpg)
Exercise 8-17 pg 372 Exercise 8-17 pg 372 Material and Labor VarianceApplication of Truisms