tailieunhanh - Ebook Managerial accounting (8E): Part 2

(BQ) Part 2 book "Managerial accounting" has contents: Segmented reporting, investment center evaluation, and transfer pricing; tactical decision making; capital investment decisions; inventory management; environmental cost management; international issues in management accounting,.and other contents. | visit visit chapter 9 Standard Costing: A Managerial Control Tool l e a r n i n g o b j e c t i v e s After studying this chapter, you should be able to: 1. Tell how unit standards are set and why standard costing systems are adopted. 2. State the purpose of a standard cost sheet. 3. Describe the basic concepts underlying variance analysis, and explain when variances should be investigated. 4. Compute the materials and labor variances, and explain how they are used for control. 5. Calculate the variable and fixed overhead variances, and give their definitions. 6. Appendix: Prepare journal entries for materials and labor variances, and show how to account for overhead variances. visit visit Scenario At the start of a new year, Rosita Mendez, president of Blue-Corn Foods, Inc., liked to look back over the past year’s results. She reviewed the income statement with pleasure: Sales were up and costs were down. Operating income had increased significantly over the year before. Rosita firmly believed that these improvements could be largely traced to the institution of a standard costing system early last year. At this time last year, Rosita was also reviewing the previous year’s performance, but was not happy. Sales were slipping and costs seemed out of control. Quality control had been lacking; more than once, a state government’s division of weights and measures had fined Blue-Corn Foods for underfilling its bags of “Bluechitos,” crispy chips made from blue corn. Rosita had gone directly to BlueCorn Foods’ controller, Mel Hamilton. Mel had confirmed her assessment of the need for closer cost and quality control. He explained that a standard cost system could go a long way toward solving the difficulties that troubled Rosita. A standard cost system determines the price and quantity standards for

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