Standard Costing

Definitions
Standard/Budgeted Amount = Set @ beginning of year (in Master Budget)
Applied/Flexible Overhead = (Std VOH rate) x (Flexible budget hrs, based on actual prodution)

Materials ri!e "arian!e = !"(!# $ S#)
#uantit$ "arian!e = S#(!" % S")

Fixed O/% "olume "arian!e = Budgeted FOH (&aster budget) $ FOH applied (std FOH rate 'std
hours based on atual ati(ity output)
i)e) %* Measures ho+ atual output o&pares +ith +hat +as budgeted

&nfavorable = Dr'
Favorable = (r'

Big Six "arian!es )*op + Bottom = &nfavorable,
,) Materials ri!e "arian!e (based on purhases)
a) (!" purh x !#) o&pared to (!" purh x S#)
-) Materials &sage "arian!e
a) (!" used x S#) o&pared to (S" x S#)
b) !" used . output x /M re0uired per unit
1otal Material Variane %* Co&bine Material #rie23sage
4) -abor .ate )ri!e, "arian!e
a) (!t hours +or5ed x !#) o&pared to (!t hours +or5ed x S#)
6) -abor /ffi!ien!$ )&sage, "arian!e
a) (!t hrs +or5ed x S#) o&pared to (Std hrs sheduled x S#)
b) Std hrs sheduled . (Output x labor hours per unit of output)
1otal 7abor Variane %* Co&bine 8ate29ffiieny Varianes
:) (ontrollable Fa!tor$ O% "arian!e
a) Fatory OH is both (ariable and fixed
b) Fatory OH represents all indiret &anufaturing osts
) Flexible Budget = Fixed ; (VOH rate ' !tual hours)

*0o10a$ Anal$sis of Fa!tor$ O/% /xample
(ontrollable O/% "arian!e (Fixed < Variable)

!tual o(erhead osts (gi(en) . =,>,:??



Standard Hours Flexible Budget for OH . (Fixed ; VOH rate'units produed)
"olume O/% "arian!e (Fixed O2H O@7A is under2o(er applied)

O(erhead !pplied to BC# . (#redeter&ined rate ' Standard hours that are budgeted)

*hree 2a$ Anal$sis of Overhead "arian!e
Spending
9ffiieny
Volu&e