1、2019/10/2,1,CHAPTER 8 Flexible Budgets, Overhead Cost Variances, and Management Control,2019/10/2,2,Cost Variance Analysis,Variable Overhead VariancesFixed Overhead Variances,2019/10/2,3,Webbs overhead,2019/10/2,4,Developing Budgeted Variable Overhead Cost Rates,Step 1:Choose the period to be used f
2、or the budget.12-month Step 2:Select the cost-allocation bases to use in allocating variable overhead costs to output produced. Step 3:Identify the variable overhead costs associated with each cost-allocation base. Step 4:Compute the rate per unit of each cost-allocation base used to allocate variab
3、le overhead costs to output produced.,2019/10/2,5,Webb,Step 1:Choose the period to be used for the budget.12-month Step 2:Select the cost-allocation bases to use in allocating variable overhead costs to output produced.0.4 machine-hour/unit 144 000units=57 600 machine-hours Step 3:Identify the varia
4、ble overhead costs associated with each cost-allocation base.Variable overhead cost for 2008=$1 728 000 Step 4:Compute the rate per unit of each cost-allocation base used to allocate variable overhead costs to output produced.Budgeted variable overhead cost rate per input unit=1 728 000/57 600=30/ho
5、urBudgeted variable overhead cost rate per output unit=0.4hour/unit30=12/jacket,2019/10/2,6,Variable overhead cost variances（P208）,2019/10/2,7,Flexible-budget analysis,2019/10/2,8,Reason,Webb use more machine-hours than planned to produce the 10 000 jackets? Workers were less skilled than expected i
6、n using machines? Webb spend more on variable overhead costs , such as maintenance?,2019/10/2,9,Variable Overhead Variances,The variable overhead flexible-budget variance measures the difference between the actual variable overhead costs and the flexible-budget variable overhead costs.,Variable Over
7、head Flexible Budget Variance,SpendingVariance,Efficiency Variance,2019/10/2,10,AH AVR,Spending variance = AH(AVR - SVR) Efficiency variance = SVR(AH - SH),Spending Variance,Efficiency Variance,Actual Flexible Budget Flexible Budget Variable for Variable for Variable Overhead Overhead at Overhead at
8、 Incurred Actual Hours Standard Hours,AH SVR,SH SVR,Variable Overhead Variances,2019/10/2,11,Variable Overhead Variances,The variable overhead spending variance is the difference between the actual amount of variable overhead incurred and the budgeted amount allowed for the actual quantity of the va
9、riable overhead allocation base used for the actual output units produced. The variable overhead efficiency variance measures the efficiency with which the cost-allocation base is used.,2019/10/2,12,Spending Variance,Efficiency Variance,AH SVR,AH AVR,AH = Actual Hours of Activity AVR = Actual Variab
10、le Overhead Rate SVR = Standard Variable Overhead Rate SH = Standard Hours Allowed,SH SVR,Actual Flexible Budget Flexible Budget Variable for Variable for Variable Overhead Overhead at Overhead at Incurred Actual Hours Standard Hours,Variable Overhead Variances,2019/10/2,13,2019/10/2,14,Variable ove
11、rhead efficiency variance,=(4 500HOURS0.40HR/UNIT10 000UNITS) $30/HOUR =(4 500HOURS 4 000HOURS) $30/HOUR =$15 000U,2019/10/2,15,4500 HOURS VS 4000 HOURS,Possible causes for exceeding budget Workers were less skilled than expected in using machines Production scheduler inefficiently scheduled jobs ,r
12、esulting in more machine-hours used than budgeted Machines were not maintained in good operating condition Webbs sales staff promised a distributor a rush delivery, which resulted in more machine-hours used than budgeted Budgeted machine time standards were set too tight,Potential management respons
13、es Encourage the human resources department to implement better employee-hiring practices and training procedures Improve plant operations by installing production scheduling software Ensure preventive maintenance is done on all machines Coordinate production schedules with sales staff and distribut
14、ors and share information with them Commit more resources to develop appropriate standards,2019/10/2,16,Variable overhead spending variance,=($29/machine hour$30 /machine hour) 4 500 machine-hours =(-1machine hour) 4 500 machine-hours =$4 500F,2019/10/2,A Roadmap: Variable Overhead,2019/10/2,Differe
15、nce between fixed overhead and variable overhead?,18,2019/10/2,fixed overhead efficiency?,no fixed overhead efficiency variance because the amount of fixed overhead is unaffected by how efficiently the allocation basis is used to produce output,19,2019/10/2,A Roadmap: Fixed Overhead,2019/10/2,21,Dev
16、eloping budgeted fixed overhead rates,Step1 :choose the period to use for the budget Step 2:select the cost-allocation bases to use in allocating fixed overhead costs to output produced Step 3:identify the fixed overhead costs associated with each cost-allocation base Step 4:compute the rate per uni
17、t of each cost-allocation base used to allocate fixed overhead costs to output produced(p213 or 263),2019/10/2,The Details: Fixed OH Variances,Fixed Overhead Flexible-Budget Variance is the difference between actual fixed overhead costs and fixed overhead costs in the flexible budget This is the sam
18、e amount for the Fixed Overhead Spending Variance,2019/10/2,The Details: Fixed OH Variances,Production-Volume Variance is the difference between budgeted fixed overhead and fixed overhead allocated on the basis of actual output produced This variance is also known as the Denominator-Level Variance o
19、r the Output-Level Overhead Variance,2019/10/2,24,Fixed overhead cost variances,2019/10/2,25,Production-volume variance,2019/10/2,26,2019/10/2,27,Fixed overhead cost variances,2019/10/2,28,Integrated analysis of overhead cost variance（P221）,2019/10/2,29,4 variance analysis,2019/10/2,30,3 variance an
20、alysis,2019/10/2,31,2 variance analysis,2019/10/2,32,1 variance analysis,Total overhead $65 500U,2019/10/2,33,2019/10/2,34,Cost of goods sold at standard cost,2019/10/2,35,Operating income based on budgeted profit per jacket,2019/10/2,36,2019/10/2,37,Actual operating income,2019/10/2,38,2019/10/2,39
21、,=108 00090 000 =18 000U,=276 000230 000 =46 000U,2019/10/2,40,Financial and nonfinancial performance measures,Quantity of actual indirect materials used per machine-hour, relative to quantity of budgeted indirect materials used per machine-hours Actual energy used per machine-hour, relative to budg
22、eted energy used per machine-hour Actual machine-hours per jacket, relative to budgeted machine-hours per jacket,2019/10/2,41,Activity-based costing and variance analysis,Step 1: Using budged batch size, calculate the number of batches that should have been used to produce actual output Step 2: Using budgeted setup-hours per batch, calculate the number of setup hours that should have been used Step 3: Using budgeted variable cost per setup hours, calculate the flexible budgeted for variable setup overhead costs,2019/10/2,42,2019/10/2,43,2019/10/2,44,The end!,
