cost08flexible budgets, variances, and management control ii(成本管理会计-复旦, 洪剑鞘)

Flexible Budgets, Variances, and Management Control: II,Chapter 8,Introduction,Overhead costs are a major cost area for many organizations.Planning and control of overhead costs is an ongoing challenge to managers.This chapter emphasizes the overhead categories of variable and fixed manufacturing overhead.,Learning Objectives,Explain similarities and differences in the planning of variable overhead costs and the planning of fixed overhead costsIdentify the key features of a standard costing systemCompute variable overhead spending and efficiency variances,Learning Objectives,Explain how the efficiency variance for a variable indirect cost item differs from the efficiency variance for a direct cost itemCompute the budgeted fixed overhead rateExplain two caveats to consider when interpreting the production-volume variance as a measure of the economic cost of unused capacity,Learning Objectives,Show how the 4-Variance Analysis approach reconciles the actual overhead incurred with the overhead amounts allocated during the period,Learning Objective 1,Explain similarities and differences in the planning of variable overhead costs and the planning of fixed overhead costs,Planning of Variable and Fixed Overhead Costs,Rockville Co. manufactures a dress suit that is then sold to distributors.Variable overhead costs include:EnergyMachine maintenanceIndirect materialsIndirect labor,Planning of Variable and Fixed Overhead Costs,Fixed manufacturing overhead costs include:Plant leasing costsSome administrative costs (plant managers salary)Depreciation,Planning of Variable and Fixed Overhead Costs,Effective planning of variable overhead costs involves undertaking only those variable overhead activities that add value for customers using the product or service.Rockvilles customers perceive sewing to be an essential activity, therefore, maintenance activities for sewing machines included in variable overhead costs are also essential.,Planning of Variable and Fixed Overhead Costs,Effective planning of fixed overhead costs involves planning to undertake only essential activities and then planning to be efficient in that undertaking.The key challenge with planning fixed overhead is choosing the appropriate level of capacity or investment that will benefit the company over an extended time period.,Planning of Variable and Fixed Overhead Costs,Most of the key decisions that determine the level of fixed overhead costs to be incurred are made at the start of a budget period.Day-to-day, ongoing operating decisions play a large role in determining the level of variable overhead costs incurred in the budget period.,Learning Objective 2,Identify the key features of a standard costing system,Standard Costing,Standard costing is a costing method traces direct costs to a cost object by multiplying the standard price(s) or rate(s) times the standard inputs allowed for actual outputs produced.allocates indirect costs on the basis of the standard indirect rate(s) times the standard inputs allowed for the actual outputs produced,Standard Costing,Costs of every product or service planned to be worked on during the period can be computed at the start of that period.Once standards have been set, the costs of operating a standard costing system can be low relative to an actual or normal costing system.,Developing Budgeted Variable Overhead Allocation Rates,Variable overhead cost allocation rates can be developed with a four step approach.Step 1: Choose the time period used to compute the budget.Rockville uses a twelve-month budget period.,Developing Budgeted Variable Overhead Allocation Rates,Set 2: Select the cost-allocation bases to use in allocating variable overhead-costs to the cost object(s).Rockville selects standard labor-hours as the cost allocation base.Rockville budgets 26,000 labor hours for a budgeted output of 13,000 suits in year 2000.,Developing Budgeted Variable Overhead Allocation Rates,Step 3: Identify the variable overhead costs associated with each cost-allocation base.Rockville groups all its variable manufacturing overhead costs (energy, machine maintenance, engineering support, indirect materials, indirect labor) into a single cost pool.Rockvilles budgeted variable manufacturing costs for 2000 are $312,000.,Developing Budgeted Variable Overhead Allocation Rates,Step 4: Compute the rate per unit of each cost-allocation base used to allocate variable overhead costs to the cost object(s).Rockville estimates a rate of $12/labor hour for its variable manufacturing overhead costs.$312,000 26,000 hours = $12/hour,Developing Budgeted Variable Overhead Allocation Rates,What is the budgeted variable overhead cost rate per output unit (dress suit)?2.00 hours allowed per output unit $12 budgeted variable overhead cost rate per input unit = $24 per suit (output unit),Learning Objective 3,Compute variable overhead spending and efficiency variances,Variable Overhead Cost Variances,The following data are for 2000 when Rockville Co. produced and sold 10,000 suits:Output units: 10,000 Labor-hours: Actual results: 21,500 Flexible-budget amount: 20,000 Static-budget amount: 26,000,Variable Overhead Cost Variances,Labor-hours per output unit: Actual results: 21,500 10,000 = 2.15 Flexible-budget amount: 20,000 10,000 = 2.00Variable manufacturing overhead costs: Actual results:$244,775 Flexible-budget amount:$240,000 Static-budget amount: $312,000,Variable Overhead Cost Variances,Variable manufacturing overhead cost per labor hour: Actual results: $244,775 21,500 = $11.3849 Flexible-budget amount: $240,000 20,000 = $12.00,Variable Overhead Cost Variances,Variable manufacturing overhead cost per output unit: Actual results: $244,775 10,000 = $24.4775 Flexible-budget amount: $240,000 10,000 = $24.00,Flexible-Budget Analysis,The variable overhead flexible-budget variance measures the difference between the actual variable overhead costs and the flexible-budget variable overhead costs.Actual results: $244,775 Flexible-budget amount $240,000 = $4,775 U,Flexible-Budget Analysis,Actual Budgeted Inputs Costs Allowed for Actual Incurred Outputs at Budgeted Rate21,500 $11.3849 20,000 $12.00 = $244,775 = $240,000 $4,775 U Flexible-budget variance,Budget Variances,Static-budget variance $67,225 F,Flexible-budgetvariance $4,775 U,Level 1,Level 2,Sales-volume variance $72,000 U,Variable Overhead Efficiency Variance,The variable overhead efficiency variance measures the efficiency with which the cost-allocation base is used.,Variable Overhead Efficiency Variance,(Actual units of variable overhead cost-allocation base used for actual outputBudgeted units of variable overhead cost-allocation base allowed for actual output)Budgeted variable overhead rate(21,500 20,000) $12 = $18,000 UThis unfavorable variance means that actual labor-hours were higher than the budgeted labor-hours allowed.,Variable Overhead Efficiency Variance,Actual Quantity Budgeted Inputs of Inputs at Allowed for Actual Budgeted Rate Outputs at Budgeted Rate 21,500 $12.00 20,000 $12.00 = $258,000 = $240,000 $18,000 U Variable overhead efficiency variance,Variable Overhead Spending Variance,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 variable overhead allocation base used for the actual output units produced.,Variable Overhead Spending Variance,Actual Actual Quantity Costs of Inputs at Incurred Budgeted Rate 21,500 $11.3849 21,500 $12.00 = $244,775 = $258,000 $13,225 F Variable overhead spending variance,Variable Overhead Variances,Flexible-budget variance $4,775 U,Efficiency variance$18,000 U,Spending variance$13,225 F,Learning Objective 4,Explain how the efficiency variance for a variable indirect cost item differs from the efficiency variance for a direct cost item,Efficiency Variance,The efficiency variance for a variable indirect cost item reflects whether more or less of the cost allocation base per output unit was used than was assumed in the flexible budget.The efficiency variance for a direct cost item reflects whether more or less of the physical inputs per output of that direct cost item was used than was assumed in the flexible budget.,Efficiency Variance,In the Rockville Co.s example, the 21,500 actual direct manufacturing labor hours are 7.5% greater than the flexible-budget amount of 20,000 direct manufacturing labor hours.(21,500 20,000) 20,000 = 7.5%Actual variable overhead costs of $244,775 are only 2% greater than the flexible-budget amount of $240,000.,Efficiency Variance,Because actual variable overhead costs increase less than labor hours, the actual variable overhead cost per labor-hour ($11.3849) is lower than the budgeted amount ($12.00).The key cause for Rockvilles unfavorable efficiency variance is the higher-than-budgeted labor-hours used.,Learning Objective 5,Compute the budgeted fixed overhead rate,Developing Budgeted Fixed Overhead Allocation Rates,Fixed overhead costs are a lump sum that remains unchanged in total for a given time period despite wide changes in the related total activity or output level.While total fixed costs are frequently included in flexible budgets, they remain the same total amount within the relevant range regardless of the output level chosen.,Developing Budgeted Fixed Overhead Allocation Rates,The steps in developing the budgeted fixed overhead rate are:Step 1: Choose the time period used to compute the budget.The budget period is typically twelve months.,Developing Budgeted Fixed Overhead Allocation Rates,Set 2: Select the cost-allocation base to use in allocating fixed overhead costs to the cost object(s).Rockville uses standard labor hours as the cost allocation base for fixed manufacturing overhead costs.This is the denominator of the budgeted fixed overhead rate computation.,Developing Budgeted Fixed Overhead Allocation Rates,It is called the denominator level or production-denominator level.In year 2000, Rockville budgets 26,000 labor hours for a budgeted output of 13,000 suits.,Developing Budgeted Fixed Overhead Allocation Rates,Step 3: Identify the fixed overhead costs associated with each cost-allocation base.Rockville groups all its fixed manufacturing overhead costs (depreciation, leasing costs, plant managers salary) in a single cost pool.Rockvilles fixed manufacturing budget for 2000 is $286,000.,Developing Budgeted Fixed Overhead Allocation Rates,Step 4: Compute the rate per unit of each cost-allocation base used to allocate fixed overhead costs to the cost object(s).Rockville estimates a rate of $11/labor-hour for its fixed manufacturing overhead costs.$286,000 26,000 = $11,Developing Budgeted Fixed Overhead Allocation Rates,What is the budgeted fixed overhead cost rate per output unit (dress suit)?2.00 hours allowed per output unit$11 budgeted fixed overhead cost rate per input unit$22 per suit (output unit),Fixed Overhead Cost Variances,The flexible budget amount for a fixed cost item is the amount included in the static budget prepared at the start of the period.No adjustment is required for differences between the actual output and the budgeted output for fixed costs.Fixed costs are unaffected by changes in the level of output.,Flexible-Budget Variance,The fixed overhead flexible-budget variance (spending variance) is the difference between actual fixed overhead costs and the fixed overhead costs in the flexible budget.Assume that Rockvilles actual total fixed overhead is $300,000 for 2000.Actual costs incurred $300,000 Flexible-budget amount $286,000 = $14,000 U,Flexible-Budget Variance,The variable overhead flexible-budget variance was subdivided into a spending variance and an efficiency variance.For fixed overhead there is not an efficiency variance. Why?Because a lump sum of fixed costs will be unaffected by the degree of operating efficiency in a given budget period.,Flexible-Budget Variance,Actual Costs Flexible Budget: Incurred Budgeted Fixed Overhead $300,000 $286,000 $14,000 U Fixed overhead spending variance Fixed overhead flexible-budget variance,Production-Volume Variance,The production-volume variance is the difference between budgeted fixed overhead and the fixed overhead allocated on the basis of the budgeted quantity of the fixed overhead allocation base allowed for the actual output produced.Denominator-level varianceOutput-level overhead variance,Production-Volume Variance,Flexible Budget:Fixed Overhead BudgetedAllocated Using Fixed Overhead Budgeted Input Allowed for Actual Output Units Produced $286,000 $220,000 $66,000 U Production-volume variance 10,000 2.00 $11 = $220,000,Fixed Overhead Variances,Fixed overhead variance $80,000 U,Volume variance$66,000 U,Spending variance$14,000 U,Learning Objective 6,Explain two caveats to consider when interpreting the production-volume variance as a measure of the economic cost of unused capacity,Interpreting the Production-Volume Variance,Caution is appropriate before interpreting the production-volume variance as a measure of the economic cost of unused capacity.One caveat is that management may have maintained some extra capacity to meet uncertain demand surges that are important to satisfy customer demands.,Interpreting the Production-Volume Variance,A second caveat is that the production-volume variance focuses only on costs.It does not take into account any price changes necessary to spur extra demand that would in turn make use of any idle capacity.,Interpreting the Production-Volume Variance,The production-volume variance arises whenever the actual level of the denominator differs from the level used to calculate the budgeted fixed overhead rate.The production-volume variance results from “unitizing” fixed costs.,Interpreting the Production-Volume Variance,Lump-sum fixed costs represent resources sacrificed in acquiring capacity.Plant Equipment leasesThese costs cannot be decreased if the resources needed are less than the resources acquired.,Interpreting the Production-Volume Variance,The unfavorable $66,000 production-volume variance measures the amount of extra fixed costs that Rockville incurred for manufacturing capacity it planned to use but did not.,Interpreting the Production-Volume Variance,Had Rockville manufactured 13,000 suits instead of 10,000, allocated fixed overhead would have been 13,000 2.00 $11 = $286,000.No production-volume variance would have occurred.,Interpreting the Production-Volume Variance,Assume that in year 2001, Rockvilles denominator level is exactly the capacity used for that budget period, but actual demand and production turns out to be 8% below the denominator level.Rockville would report an unfavorable production-volume variance.,Learning Objective 7,Show how the 4-Variance Analysis approach reconciles the actual overhead incurred with the overhead amounts allocated during the period,Integrated Analysis,A 4-Variance Analysis presents spending and efficiency variances for variable overhead costs and spending and production-volume variances for fixed overhead costs.Managers can reconcile the actual overhead costs with the overhead amounts allocated during the period.,Integrated Analysis,Actual variable overhead costs incurred $244,775,Flexible budget:budgeted inputsallowed budgeted rate $240,000,Underallocated variable overhead,Flexible-budget variance$4,775 U,Integrated Analysis,Actual variable overhead costs incurred $244,775,Actual inputsbudgeted rate $258,000,Variable overhead spending variance $13,225 F,Integrated Analysis,Actual inputsbudgeted rate $258,000,Flexible budget:budgeted inputsallowed budgeted rate $240,000,Variable overhead efficiency variance$18,000 U,Integrated Analysis,Actual fixed overhead costs incurred $300,000,Budgeted fixed overhead costs $286,000,Fixed overhead spending variance $14,000 U,Integrated Analysis,Budgeted fixed overhead costs $286,000,Budgeted inputsallowed budgeted rate $220,000,Volume variance $66,000 U,Integrated Analysis,Actual manufacturing overhead incurred