tailieunhanh - Lecture Advanced management accounting - Chapter 19

In this chapter, you will learn: What is CVP analysis? the break-even point, graphing CVP relationships, target net profit, using CVP analysis for management decisions, CVP analysis with multiple products, including income taxes in CVP analysis, practical issues in CVP analysis, an activity-based approach to CVP analysis, financial planning models. | Lecture 19: Flexible Budget, Overhead Cost variance and Management Control. Learning Objectives Prepare a flexible budget and explain the advantages of the flexible budget approach over the static budget approach. Prepare a performance report for both variable and fixed overhead costs using the flexible budget approach. Use a flexible budget to prepare a variable overhead performance report containing only a spending variance Use a flexible budget to prepare a variable overhead performance report containing both a spending and an efficiency variance. Compute the predetermined overhead rate and apply overhead to products in a standard cost system. Compute and interpret the fixed overhead budget and volume variances. 2 Planning and Overhead Variable Overhead: as efficiently as possible, plan only essential activities Fixed Overhead: as efficiently as possible, plan only essential activities, especially since fixed costs are predetermined well before the budget period begins 3 3 Standard Costing Traces direct costs to output by multiplying the standard prices or rate by the standard quantities of inputs allowed for actual outputs produced Allocates overhead costs on the basis of the standard overhead-cost rates time the standard quantities of the allocation bases allowed for the actual outputs produced 4 4 A Roadmap: Variable Overhead 5 5 A Roadmap: Fixed Overhead 6 6 Overhead Variances Overhead is the most difficult cost to manage, and is the least understood Overhead variances involve taking differences between equations as the analysis moves back and forth between actual results and budgeted amounts 7 7 Developing Budgeted Variable Overhead Cost Rates Choose the period to be used for the budget Select the cost-allocation bases to use in allocating variable overhead costs to output produced Identify the variable overhead costs associated with each cost-allocation base Compute the rate per unit of each cost-allocation base used to allocate variable overhead costs to | Lecture 19: Flexible Budget, Overhead Cost variance and Management Control. Learning Objectives Prepare a flexible budget and explain the advantages of the flexible budget approach over the static budget approach. Prepare a performance report for both variable and fixed overhead costs using the flexible budget approach. Use a flexible budget to prepare a variable overhead performance report containing only a spending variance Use a flexible budget to prepare a variable overhead performance report containing both a spending and an efficiency variance. Compute the predetermined overhead rate and apply overhead to products in a standard cost system. Compute and interpret the fixed overhead budget and volume variances. 2 Planning and Overhead Variable Overhead: as efficiently as possible, plan only essential activities Fixed Overhead: as efficiently as possible, plan only essential activities, especially since fixed costs are predetermined well before the budget period begins 3 3 Standard