MGM222H5 Chapter Notes - Chapter 10: Six Sigma, Variable Cost, Industrial Engineering
Document Summary
Favourable: when actual purchase less than standard purchase: unfavourable: for ex. When more quantity used than std. quantity: problem of determining purchase price variance at different time than materials usage variance wouldn"t occur in jit environment. Labour rate variance: measure of the difference b/w actual hourly labour rate and standard rate, multiplied by number of hours worked during the period: (ahxar)-(ahxsr, ah(ar-sr, can arise through way labour is used: ex. Purchase price of variable overhead items differs from standards. The actual quantity of variable overhead items used differs from standards. Overhead rates and fixed overhead analysis: denominator activity: activity figure used to compute the predetermined overhead rate, por: overhead from flexible budget at denom. Level of activity/denom level of activity: overhead is instead applied to work in process on basis of standard hours allowed for actual output of the period rather than actual numbers of hours worked.
