Task Team of FUNdAMENTAL aCCOUNTING School of Business, Sun Yat-sen University Direct labour urs s 20 per hour Variable mfg 2 hours 10 per hour s Total standard unit s85.00 Variance Analysis The process of variance analysis can be listed as follows Prepare standard cost performance reports Analyze Take action advances Investigate causes Standard cost accounting provides management with information about costs that differ from budgeted amounts(variances). Management may choose to focus only on variances that are significant. This approach is referred to as management by exception Material variances: Please refer to ppt page 51 Labour variances: Please refer to ppt page 52 Variable overhead variances: Please refer to ppt page 53 Fixed overhead variances: Please refer to ppt page 54 Standard costs accounting systems record variances in the accounts, which can simplify recordkeeping and help in the preparation of reports Discu ABC Company has the following direct material standard to manufacture one unit product 3.0 kilograms per unit at $8.00 per kilogram. Last week 6600 kilograms of material were purchased and used to make 2000 units. The material cost a total of $53000 What is the actual price per kilogram paid for the material? a. $7.26 per kilo b. $8.13 per kilogram c. $8.03 per kilogram d. $8.00 per kilogram AP=S53000÷6600kg AP= $8.03 per ksTask Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Yat-sen University Direct materials 1 kg $ 25 per kg $ 25.00 Direct labour 2 hours $ 20 per hour $ 40.00 Variable mfg. overhead 2 hours $ 10 per hour $ 20.00 Total standard unit cost $ 85.00 Variance Analysis The process of variance analysis can be listed as follows: Standard cost accounting provides management with information about costs that differ from budgeted amounts (variances). Management may choose to focus only on variances that are significant. This approach is referred to as management by exception. Material variances: Please refer to ppt page 51. Labour variances: Please refer to ppt page 52. Variable overhead variances: Please refer to ppt page 53. Fixed overhead variances: Please refer to ppt page 54. Standard costs accounting systems record variances in the accounts, which can simplify recordkeeping and help in the preparation of reports. Discussions ABC Company has the following direct material standard to manufacture one unit product: 3.0 kilograms per unit at $8.00 per kilogram. Last week 6600 kilograms of material were purchased and used to make 2000 units. The material cost a total of $53000. What is the actual price per kilogram paid for the material? a. $7.26 per kilogram. b. $8.13 per kilogram. c. $8.03 per kilogram. d. $8.00 per kilogram. AP = $53000 ÷ 6600 kg AP = $8.03 per kg Take action Prepare standard cost performance reports Investigate causes Analyze variances