ACCT 203 Lecture Notes - Lecture 24: Balanced Scorecard

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brownduck883

25 May 2018

School

George Mason University

Department

Accounting

Course

ACCT 203

Professor

Harley

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GMU ACCOUNTING 203 Lecture 24

Budget performance report

A report comparing actual results with budget figures.

Budgeted variable factory overhead

The standard variable overhead for the actual units produced.

Controllable variance

The difference between the actual amount of variable factory overhead cost

incurred and the amount of variable factory overhead budgeted for the standard

product.

Cost variance

The difference between actual cost and the flexible budget at actual volumes.

Currently attainable standards

Standards that represent levels of operation that can be attained with reasonable

effort.

Direct labor rate variance

The cost associated with the difference between the standard rate and the actual

rate paid for direct labor used in producing a commodity.

Direct labor time variance

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Document Summary

A report comparing actual results with budget figures. The standard variable overhead for the actual units produced. The difference between the actual amount of variable factory overhead cost incurred and the amount of variable factory overhead budgeted for the standard product. The difference between actual cost and the flexible budget at actual volumes. Standards that represent levels of operation that can be attained with reasonable effort. The cost associated with the difference between the standard rate and the actual rate paid for direct labor used in producing a commodity. The cost associated with the difference between the standard hours and the actual hours of direct labor spent producing a commodity. The cost associated with the difference between the standard price and the actual price of direct materials used in producing a commodity. The cost associated with the difference between the standard quantity and the actual quantity of direct materials used in producing a commodity.

Related Questions

Factory Overhead The difference between actual cost and theflexible budget at actual volumes.Cost Variances

The following data relate to factory overhead cost for theproduction of 3,000 computers:

Actual:	Variable factory overhead	$42,200
	Fixed factory overhead	17,500
Standard:	3,000 hrs. at $18	54,000

If productive capacity of 100% was 5,000 hours and the factoryoverhead cost budgeted at the level of 3,000 standard hours was$61,000, determine the variable factory overhead The differencebetween the actual variable overhead costs and the budgetedvariable overhead for actual production.Controllable Variance,fixed factory overhead The difference between the budgeted fixedoverhead at 100% of normal capacity and the standard fixed overheadfor the actual production achieved during the period.volumevariance, and total Reports budgeted and actual costs for variableand fixed factory overhead along with the related controllable andvolume variances.factory overhead cost variance. The fixed factoryoverhead rate was $3.5 per hour. Enter a favorable variance as anegative number using a minus sign and an unfavorable variance as apositive number.

what is the controllable variance amount?

what is the volume variance amount?

what is the total fractory overhead cost variance amount?

Genuine Spice Inc. began operations on January 1, 2016. Thecompany produces eight-ounce bottles of hand and body lotion calledEternal Beauty. The lotion is sold wholesale in 12-bottle cases for$100 per case. There is a selling commission of $20 per case. TheJanuary direct materials, direct labor, and factory overhead costsare as follows:

DIRECT MATERIALS
	Cost Behavior	Units per Case	Cost per Unit	Cost per Case
Cream base	Variable	100 ozs.	$0.02	$ 2.00
Natural oils	Variable	30 ozs.	0.30	9.00
Bottle (8-oz.)	Variable	12 bottles	0.50	6.00
				$17.00
DIRECT LABOR
Department	Cost Behavior	Time per Case	Labor Rate per Hour	Cost per Case
Mixing	Variable	20 min	$18.00	$6.00
Filling	Variable	5	14.40	1.20
		25 min.		$7.20

FACTORY OVERHEAD
	Cost Behavior	Total Cost
Utilities	Mixed	$600
Facility lease	Fixed	14,000
Equipment depreciation	Fixed	4,300
Supplies	Fixed	660
		$19,560

During September of the current year, the controller was askedto perform variance analyses for August. The January operating dataprovided the standard prices, rates, times, and quantities percase. There were 1,500 actual cases produced during August, whichwas 250 more cases than planned at the beginning of the month.Actual data for August were as follows:

	Actual Direct Materials
	Price per Unit	Quantity per Case
Cream base	$0.016 per oz.	102 ozs.
Natural oils	$0.32 per oz.	31 ozs.
Bottle (8-oz.)	$0.42 per bottle	12.5 bottles
	Actual Direct	Actual Direct Labor
	Labor Rate	Time per Case
Mixing	$18.20	19.50 min.
Filling	14.00	5.60 min.

Actual variable overhead	$305.00
Normal volume	1,600 cases

The prices of the materials were different than standard due tofluctuations in market prices. The standard quantity of materialsused per case was an ideal standard. The Mixing Department used ahigher grade labor classification during the month, thus causingthe actual labor rate to exceed standard. The Filling Departmentused a lower grade labor classification during the month, thuscausing the actual labor rate to be less than standard.

1. Determine and interpret the direct materials price andquantity variances for the three materials.

Direct Materials Price Variance
	Cream Base		Natural Oils		Bottles
Actual price
Standard price
Difference
X Actual quantity		ozs.		ozs.		btls.
Direct materials price variance		F		U		F

Direct Materials Quantity Variance
	Cream Base		Natural Oils		Bottles
Actual quantity		ozs.		ozs.		btls.
Standard quantity
Difference		ozs.		ozs.		btls.
X Standard price
Direct materials quantity variance		U		U		U

2. Determine the direct labor rate and time variances forthe two departments. Round hours to the nearest tenth of anhour.

Direct Labor Rate Variance
	Mixing Department		Filling Department
Actual rate
Standard rate
Difference
X Actual time
Direct labor rate variance		U		F

Direct Labor Time Variance
	Mixing Department		Filling Department
Actual time
Standard time
Difference
X Standard rate
Direct labor time variance		F		U

3. Determine and interpret the factory overhead controllablevariance.

Factory Overhead Controllable Variance
Actual variable overhead
Variable overhead at standard cost
Factory overhead controllable variance		U

4. Determine and interpret the factory overhead volumevariance. Round rate to four decimal places.

Factory Overhead Volume Variance
Normal volume (cases)
Actual volume (cases)
Difference
X Fixed factory overhead rate
Factory overhead volume variance		U

pinkfox780

Genie in a Bottle Company (GBC) manufactures plastic two-liter bottles for the beverage industry. The cost standards per 100 two-liter bottles are as follows:

Cost Category Standard Cost per 100 Two-Liter Bottles
Direct labor $3.00
Direct materials 9.00
Factory overhead 0.60
Total $12.60

At the beginning of July, GBC management planned to produce 385,000 bottles. The actual number of bottles produced for July was 389,000 bottles. The actual costs for July of the current year were as follows:

Cost Category Actual Cost for the Month Ended July 31
Direct labor $11,150
Direct materials 33,819
Factory overhead 2,802
Total $47,771

Required:
A. Prepare the July manufacturing standard cost budget (direct labor, direct materials, and factory overhead) for GBC, assuming planned production.
B. Prepare a budget performance report for manufacturing costs, showing the total cost variances for direct materials, direct labor, and factory overhead for July. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
C. Interpret the budget performance report.

A. Prepare the July manufacturing standard cost budget (direct labor, direct materials, and factory overhead) for GBC, assuming planned production.

Genie in a Bottle Company
Manufacturing Cost Budget
For the Month Ended July 31, 2016

1
Manufacturing Costs
Standard Cost at Planned Volume (385,000 Bottles)
2
Direct labor
3
Direct materials
4
Factory overhead
5
Total

B. Prepare a budget performance report for manufacturing costs, showing the total cost variances for direct materials, direct labor, and factory overhead for July. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Genie in a Bottle Company
Budget Performance Report
For the Month Ended July 31, 2016

1
Manufacturing Costs
Actual Costs
Standard Cost at Actual Volume (389,000 Bottles)
Cost Varianceâ(Favorable) Unfavorable
2
Direct labor
3
Direct materials
4
Factory overhead
5
Total manufacturing costs

C. Interpret the budget performance report.
The Company's actual costs were $1,243 budgeted. direct labor and direct material cost variances more than offset a small factory overhead cost variance.

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ACCT 203 Lecture Notes - Lecture 24: Balanced Scorecard

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