tailieunhanh - Lecture Advanced management accounting - Chapter 15

This chapter presents the following content: Supply chain management, managing suppliers, managing inventory, managing customers, managing time. | Lecture 15: Direct Cost Variance and Management Control Learning Objectives Explain how direct materials standards and direct labor standards are set. Compute the direct materials price and quantity variances and explain their significance. Compute the direct labor rate and efficiency variances and explain their significance. Compute the variable manufacturing overhead spending and efficiency variances. Understand how a balanced scorecard fits together and how it supports a company’s strategy. Compute delivery cycle time, throughput time, and manufacturing cycle efficiency (MCE). Prepare journal entries to record standard costs and variances. 2 Basic Concepts Variance – difference between an actual and an expected (budgeted) amount Management by Exception – the practice of focusing attention on areas not operating as expected (budgeted) Static (Master) Budget – is based on the output planned at the start of the budget period 3 3 Basic Concepts Static-Budget Variance (Level 0) – the difference between the actual result and the corresponding static budget amount Favorable Variance (F) – has the effect of increasing operating income relative to the budget amount Unfavorable Variance (U) – has the effect of decreasing operating income relative to the budget amount 4 4 Variances Variances may start out “at the top” with a Level 0 analysis. This is the highest level of analysis, a super-macro view of operating results. The Level 0 analysis is nothing more than the difference between actual and static-budget operating income 5 5 Variances Further analysis decomposes (breaks down) the Level 0 analysis down into progressively smaller and smaller components Answers: “How much were we off?” Levels 1, 2, and 3 examine the Level 0 variance into progressively more-detailed levels of analysis Answers: “Where and why were we off?” 6 6 Level 1 Analysis, Illustrated 7 7 Evaluation Level 0 tells the user very little other than how much Contribution Margin was off from budget. Level 0 | Lecture 15: Direct Cost Variance and Management Control Learning Objectives Explain how direct materials standards and direct labor standards are set. Compute the direct materials price and quantity variances and explain their significance. Compute the direct labor rate and efficiency variances and explain their significance. Compute the variable manufacturing overhead spending and efficiency variances. Understand how a balanced scorecard fits together and how it supports a company’s strategy. Compute delivery cycle time, throughput time, and manufacturing cycle efficiency (MCE). Prepare journal entries to record standard costs and variances. 2 Basic Concepts Variance – difference between an actual and an expected (budgeted) amount Management by Exception – the practice of focusing attention on areas not operating as expected (budgeted) Static (Master) Budget – is based on the output planned at the start of the budget period 3 3 Basic Concepts Static-Budget Variance (Level 0) – the .