Currently attainable standards, sometimes called normal standards, can be attained with reasonable effort. Such standards, which are used by most companies, allow for normal production difficulties and mistakes.
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The differences between actual and standard costs are called costs variances.A favorable cost variance occurs when the actual cost is less than the standard cost (at actual volumes).An unfavorable cost variance occurs when the actual cost exceeds the standard cost.
A favorable cost variance occurs when the actual cost is less than the standard cost (at actual volumes).An unfavorable cost variance occurs when the actual cost exceeds the standard cost.
what information a budget performance report provides (actual and standard costs at a given level of production, including analysis of favorable and unfavorable variances)
The report that summarizes actual costs, standard costs, and the differences for the units produced is called a budget performance report
Direct Materials Price Variance = (Actual Price - Standard Price) x Actual QuantityDirect Materials Quantity Variance = (Actual Quantity - Standard Quantity) x Standard Price
A nonfinancial performance measure expresses performance in a measure other than dollars.Nonfinancial measures can be linked to either the inputs or outputs of an activity or process. A process is a sequence of activities linked together for performing a particular task.InputsNumber of employeesEmployee experienceEmployee trainingFryer reliabilityNumber of new menu itemsFountain drinks availableOutputsLine waitPercent order accuracyFriendly service score
factory overhead variances - just know they are more complicated to determine and even if you have a budgetedamount calculated ahead of time, it does not make the analysis any less complicated.
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Factory overhead costs are more difficult to analyze than direct labor and materials costs. This is because factory overhead costs have fixed and variable cost elements.