金陵科技学院-管理会计（双语）Lecture 6.pptVIP

3. OH VARIANCE–JOURNAL ENTIRIES Close OH account and recognise variances: Fixed Spending Variance DR 1,400 Variable Spending Variance DR 10,000 Fixed Volume Variance DR 6,000 Variable Efficiency Variance CR 500 OH CR 16,900 * Lecture 6 STANDARD COSTING AND OVERHEADS DISPOSITION OF VARIANCES Review What is std costing? Caculations of each manufacturing cost ? * A. Standard costing -OHs * 1. Standard costing – OH compared with DM, DL DMDL OHs 1.1 COMPARISON WITH LAST WEEK’S LECTURE * 1. Standard costing – OH compared with DM, DL FIXED OH VOLUME VARIANCE (also called denominator and production volume variance (PVV) A fixed overhead volume variance occurs whenever Volume variance (F) = produced more units than budgeted Volume variance (U) = produced fewer units than budgeted Volume variance 0 = actual units produced equals budgeted production. * 1. Standard costing – OH compared with DM, DL An overhead price (spending) variance occurs when a firm spends more or less on either fixed or variable overhead for units produced than it planned (budgeted) to spend. A variable overhead efficiency variance occurs when a firm uses more or fewer units of the cost driver (in ITB’s case, machine hours) than it should have used for the units produced. (Note that the cost driver will not always be machine hours, so you need to read the question.) * 1. Standard costing – OH compared with DM, DL Common conventions of OHs If given a budgeted fixed amount for a year, divide it by 12 to convert to a monthly figure. Where possible, variances are calculated separately for fixed and variable overhead. Some firms have a separate ledger account for fixed and variable overhead. Other firms include both fixed and variable in the one account, which is what we do. In the variance table, these notes show the fixed calculations on the first line, then variable costs. This setting out is chosen simply