AKUNTANSI MANAJEMEN OPENCOURSEWARE UNIVERSITAS PEMBANGUNAN JAYA ch9 Slide ACC204 ch9
9 -1
CHAPTER
Standard
Costing: A
Managerial
Control Tool
9 -2
Objectives
Objectives
1. Tell how unitAfter
standards
arethis
set and why
studying
After studying this
standard costing
systems
are adapted.
chapter,
you
should
chapter, you should
2. State the purposebe
of
a
standard
cost
sheet.
able
to:
be able to:
3. Describe the basic concepts underlying
variance analysis, and explain when
variances should be investigated.
4. Compute the material and labor variances,
and explain how they are used for control.
Continued
Continued
9 -3
Objectives
Objectives
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.
9 -4
Cost
Cost control
control often
often means
means
the
the difference
difference between
between
success
success and
and failure.
failure.
9 -5
Why Standard Cost Systems
Are Adopted
Standard costing systems enhance planning
and control and improve performance
measurement.
Standard costing systems facilitate product
costing.
9 -6
Manufacturing Costs
Direct
Materials
Direct
Labor
Overhead
Actual costing system
Actual
Actual
Actual
Normal costing system
Actual
Actual
Budgeted
Standard costing system
Standard
Standard
Standard
9 -7
Standard Cost Sheet
for Corn Chips
Description
Direct materials:
Yellow corn
Cooking oil
Salt
Lime
Bags
Total direct materials
Standard Standard Standard
Price
Usage
Cost Subtotal
$0.006
0.031
0.005
0.400
0.044
18 oz.
2 oz.
1 oz.
0.01 oz.
1 bag.
$0.108
0.062
0.005
0.004
0.044
$0.223
9 -8
Standard Cost Sheet
for Corn Chips
Standard Standard Standard
Price
Usage
Cost Subtotal
Description
Direct materials
Direct labor:
Inspectors
$7.000
Machine operators
10.000
Total direct labor
Overhead:
Variable overhead
3.850
Fixed overhead
32.050
Total overhead
Total standard unit cost
$0.223
0.0070 hr.
0.0008 hr.
$0.049
0.008
0.057
0.078 hr.
0.0078 hr.
$0.030
0.250
0.280
$0.560
9 -9
During
During the
the first
first week
week of
of March,
March, 100,000
100,000
packages
packages of
of corn
corn chips
chips are
are produced.
produced.
The
The standard
standard quantity
quantity of
of yellow
yellow corn
corn
meal
meal per
per package
package isis 18
18 ounces.
ounces.
9 -10
Standard Quantity of Materials Allowed
SQ = Unit quantity standard x Actual output
= 18 x 100,000
= 1,800,000 ounces
Standard Hours Allowed
SH = Unit labor standard x Actual output
= 0.0008 x 100,000
= 80 direct labor hours
9 -11
Total variance = Price variance + Usage variance
= (AP – SP)AQ + (AQ – SQ)SP
= [(AP x AQ) – (SP x AQ)]
+ [(SP x AQ) – (SP x SQ)]
= (AP x AQ) – (SP x AQ)]
+ (SP x AQ) – (SP x SQ)
= (AP x AQ) – (SP x SQ)
Variance Analysis: General Description
1. AP x AQ
(Actual Quantity
of Input at Actual
Price)
2. SP x AQ
(Actual Quantity
of Input at
Standard Price)
Price Variance
(1-2)
3. SP x SQ
(Standard
Quantity of Input
at Standard Price)
Usage Variance
(2-3)
Budget
Variance (1-3)
9 -12
9 -13
Unfavorable
Unfavorable variances
variances
occur
occur whenever
wheneveractual
actual
prices
prices or
or usage
usage of
of inputs
inputs
are
are greater
greater than
than standard
standard
prices
prices or
or usage.
usage.
Favorable
Favorable variances
variances
occur
occur whenever
whenever the
the
opposite
opposite occurs.
occurs.
9 -14
Cost
x
x
x
x
$110,000
$100,000
x
x
$ 90,000
Time
9 -15
Variance
VarianceAnalysis:
Analysis: Materials
Materials and
and Labor
Labor
Actual production
48,500 bags of corn chips
Actual cost of corn 780,000 ounces of $0.0069 = $5,382
Actual cost of
inspection labor
Corn
Inspection labor
360 hours at $7.35 = $2,646
Actual Costs Budgeted Costs Total Variance
$5,382.00
$5,238.00
$144.00 U
2,646.00
2,376.50
269.50 U
Variance Analysis: Columnar Approach
AQ x AP
780,000 x 0.0069
$5,382
AQ x SP
780,000 x $.0.0060
$4,680
$702 U
Price Variance
SQ x SP
873,000 x $0.0060
$5,238
$558 F
Usage Variance
$144 U
Total Variance
9 -16
9 -17
Material
Material Price
Price Variance
Variance
MPV = (AP – SP)AQ
The actual
The actual
The standard
quantity of
price per price
unit per unit
material used
9 -18
Material
Material Price
Price Variance
Variance
MPV = (AP – SP)AQ
= ($0.0069 – $0.0060)780,000
= $0.0009 x 780,000
= $702 U
Percent
Percent of
of SP
SPxx SQ
SQ == $702/$4,680
$702/$4,680 == 15%
15%
9 -19
Direct
Direct Materials
Materials Usage
Usage Variance
Variance
MUV = (AQ – SQ)SP
The standard
The actual
The standard
quantity
of
quantity of
price per unit
materials
materials used
allowed for the
actual output
9 -20
Direct
Direct Materials
Materials Usage
Usage Variance
Variance
MUV = (AQ – SQ)SP
= (780,000 – 873,000)($0.006)
= 93,000 x $0.006
= $558 F
Percent of SQ x SP = $558/$5,238 = 10.7%
9 -21
Labor
Labor Rate
Rate Variances
Variances
LRV = (AR – SR)AH
The actual
The actual
The standard
hourly wage
direct labor
hourly wage
rate
rate hours used
9 -22
Labor
Labor Rate
Rate Variances
Variances
LRV = (AR – SR)AH
= ($7.35 – $7.00)360
= $0.35 x 360
= $126 U
Percent of SR x SH = $126/$2,520 = 5%
Labor Variances: Columnar Approach
AH x AR
360 x $735
$2,646
AH x SR
360 x $7.00
$2,520
$126 U
Rate Variance
SH x SR
339.5 x $7.00
$2,376.50
$143.50 U
Efficiency Variance
$269.50 U
Total Variance
9 -23
9 -24
Labor
Labor Efficiency
Efficiency Variances
Variances
LEV = (AH – SH) SR
The actual
The standard
The standard
direct labor
hourly wage
direct labor
hours used
hours that rate
should have
been used
9 -25
Labor
Labor Efficiency
Efficiency Variances
Variances
LEV = (AH – SH)SR
= (360 – 339.5)$7
= 20.5 x $7
= $143.50 U
Percent of SH x SR = $143.50/$2,376.50 = 6%
9 -26
Variable Overhead Variances
Variable overhead rate (standard)
Actual variable overhead costs
Actual hours worked
Bags of chips produced
Hours allowed for production
Applied variable overhead
$3.85/DLH
$1,600
400
48,500
373.3
$1,456
Variable Overhead Variances: Columnar Approach
Actual VO
$1,600
VO Rate x
Actual Hours
$1,540
$60 U
Spending
Variance
VO Rate x
Standard Hours
$1,456
$84 U
Efficiency Variance
$144 U
Total Variance
9 -27
9 -28
Variable
Variable Overhead
Overhead
Spending
Spending Variances
Variances
VOSV = (AVOR x AH) – (SVOR x AH)
= (AVOR – SVOR)AH
= ($4.00 – $3.85)400
= $60 U
9 -29
Crunch Chips, Inc.
Flexible Budget Performance Report
For the Week Ended March 8, 2004
Cost
Formula
Actual
Costs
Spending
Budget Variance
$3.00
$1,190
$1,200
$10 F
Electricity
0.78
385
312
73 U
Water
0.07
25
28
3 F
$3.85
$1,600
$1,540
$60 U
Gas
Total cost
9 -30
Crunch Chips, Inc.
Performance Report
For the Week Ended March 8, 2004
Actual
Cost
Formula Costs
Gas
Budget
for
Spending Standard Efficiency
Budget Variance Hours Variance
$3.00
$1,190
$1,200
$10 F
$1,135
$65 U
Electricity
0.78
385
312
73 U
295
17 U
Water
0.07
25
28
3 F
26
2U
$3.85
$1,600
$1,540
$60 U
$1,456
$84 U
Total cost
9 -31
Fixed Overhead Variances
Budgeted or Planned Items
Budgeted fixed overhead
$749,970
Practical activity
23,400 direct labor hours
Standard fixed overhead rate
$32.05
Hours allowed toActual
produce
3,000,000 bags of chips:
Results
0.078 x 3,000,000 = $23,400
Actual production
2,750,000 bags of chips
Actual fixed overhead cost
$749,000
Standard hours allowed for actual
production
21,450
9 -32
Total Fixed Overhead Variances
Applied fixed = Standard fixed overhead rate
overhead
x Standard hours
= $32.05 x 21,450
= $687,473 (rounded)
Total fixed = $749,000 – $687,473
overhead variance
= $61,527 underapplied
Fixed Overhead Variances: Columnar Approach
Budgeted FO
$749,970
Actual FO
$749,000
$970 F
Spending
Variance
Applied FO
$687,473
$62,497 U
Volume
Variance
$61,527 U
Total Variance
9 -33
9 -34
Crunch Chips, Inc.
Performance Report
For the Year Ended 2004
Fixed
Overhead Items
Depreciation
Salaries
Taxes
Insurance
Total fixed overhead
Actual
Costs
$530,000
Budgeted
Cost
Variance
$530,000 $ ----
159,370
159,970
600 F
50,500
50,000
500 U
9,130
10,000
870 F
$749,000
$749,970
$970 F
Volume Variance
9 -35
Volume variance = $32.05(23,400 – 21,450)
= ($32.05 x 23,400) – ($32.05 x 21,450)
= $749,970 – $687,473
= Budgeted fixed overhead – Applied
fixed overhead
= $62,497 U
9 -36
Appendix:
Accounting for
Variances
9 -37
The
The actual
actual price
price isis $0.0069
$0.0069 per
per ounce
ounce of
of
corn
corn and
and standard
standard price
price isis $0.0060,
$0.0060, and
and
780,000
780,000 ounces
ounces of
of corn
corn are
are purchased.
purchased.
Materials Inventory
4 680 00
The receiving report and the invoice are
Materials Price Variance
702 00
used to record the receipt of the
Accounts Payable
merchandise
and to control the payment.
Material
Material Price
PriceVariance
Variance
5 382 00
9 -38
During
During the
the period
period 780,000
780,000 ounces
ounces of
of corn
corn
isis placed
placed into
into production.
production. The
The
standard
standard quantity
quantity isis 873,000
873,000 ounces,
ounces,
and
and standard
standard price
price isis $0.006.
$0.006.
Work in Process
5 238 00
The receiving report and the invoice are
Materials Usage Variance
used to record the receipt of the
Materials
Inventory
merchandise
and to control the payment.
Material
Material Usage
UsageVariance
Variance
558 00
4 680 00
During
During the
the period
period the
the firm
firm has
has 360
360 actual
actual
inspection
inspection hours,
hours, while
while the
the standard
standard hours
hours
for
for the
the units
units produced
produced isis 339.5
339.5 hours.
hours. The
The
actual
actual rate
rate isis $7.35
$7.35 per
per hour
hour while
while the
the
standard
standard rate
rate isis $7.00
$7.00 per
per hour.
hour.
Work in Process
9 -39
2 376 00
The receiving report and the invoice are
Labor Efficiency Variance
143 50
used to record the receipt of the
Labormerchandise
Rate Variance and to control the payment.
126 00
Accrued Payroll
2 646 00
Labor
LaborVariances
Variances
9 -40
At
At the
the end
end of
of the
the year,
year, the
the variances
variances for
for
materials
materials and
and labor
labor are
are usually
usually closed
closed to
to
Cost
Cost of
of Goods
Goods Sold.
Sold.
Cost of Goods Sold
971 50
The receiving report and the invoice are
Material Price Variance
used to record the receipt of the
Labor
Efficiency Variance
merchandise
and to control the payment.
Labor Rate Variance
Closing
ClosingVariances
Variances
702 00
143 50
126 00
9 -41
At
At the
the end
end of
of the
the year,
year, the
the variances
variances for
for
materials
materials and
and labor
labor are
are usually
usually closed
closed to
to
Cost
Cost of
of Goods
Goods Sold.
Sold.
Material Usage Variance
558 00
The receiving report and the invoice are
Cost of Goods Sold
used to record the receipt of the
merchandise and to control the payment.
Closing
ClosingVariances
Variances
558 00
9 -42
Chapter Nine
The
The End
End
9 -43
CHAPTER
Standard
Costing: A
Managerial
Control Tool
9 -2
Objectives
Objectives
1. Tell how unitAfter
standards
arethis
set and why
studying
After studying this
standard costing
systems
are adapted.
chapter,
you
should
chapter, you should
2. State the purposebe
of
a
standard
cost
sheet.
able
to:
be able to:
3. Describe the basic concepts underlying
variance analysis, and explain when
variances should be investigated.
4. Compute the material and labor variances,
and explain how they are used for control.
Continued
Continued
9 -3
Objectives
Objectives
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.
9 -4
Cost
Cost control
control often
often means
means
the
the difference
difference between
between
success
success and
and failure.
failure.
9 -5
Why Standard Cost Systems
Are Adopted
Standard costing systems enhance planning
and control and improve performance
measurement.
Standard costing systems facilitate product
costing.
9 -6
Manufacturing Costs
Direct
Materials
Direct
Labor
Overhead
Actual costing system
Actual
Actual
Actual
Normal costing system
Actual
Actual
Budgeted
Standard costing system
Standard
Standard
Standard
9 -7
Standard Cost Sheet
for Corn Chips
Description
Direct materials:
Yellow corn
Cooking oil
Salt
Lime
Bags
Total direct materials
Standard Standard Standard
Price
Usage
Cost Subtotal
$0.006
0.031
0.005
0.400
0.044
18 oz.
2 oz.
1 oz.
0.01 oz.
1 bag.
$0.108
0.062
0.005
0.004
0.044
$0.223
9 -8
Standard Cost Sheet
for Corn Chips
Standard Standard Standard
Price
Usage
Cost Subtotal
Description
Direct materials
Direct labor:
Inspectors
$7.000
Machine operators
10.000
Total direct labor
Overhead:
Variable overhead
3.850
Fixed overhead
32.050
Total overhead
Total standard unit cost
$0.223
0.0070 hr.
0.0008 hr.
$0.049
0.008
0.057
0.078 hr.
0.0078 hr.
$0.030
0.250
0.280
$0.560
9 -9
During
During the
the first
first week
week of
of March,
March, 100,000
100,000
packages
packages of
of corn
corn chips
chips are
are produced.
produced.
The
The standard
standard quantity
quantity of
of yellow
yellow corn
corn
meal
meal per
per package
package isis 18
18 ounces.
ounces.
9 -10
Standard Quantity of Materials Allowed
SQ = Unit quantity standard x Actual output
= 18 x 100,000
= 1,800,000 ounces
Standard Hours Allowed
SH = Unit labor standard x Actual output
= 0.0008 x 100,000
= 80 direct labor hours
9 -11
Total variance = Price variance + Usage variance
= (AP – SP)AQ + (AQ – SQ)SP
= [(AP x AQ) – (SP x AQ)]
+ [(SP x AQ) – (SP x SQ)]
= (AP x AQ) – (SP x AQ)]
+ (SP x AQ) – (SP x SQ)
= (AP x AQ) – (SP x SQ)
Variance Analysis: General Description
1. AP x AQ
(Actual Quantity
of Input at Actual
Price)
2. SP x AQ
(Actual Quantity
of Input at
Standard Price)
Price Variance
(1-2)
3. SP x SQ
(Standard
Quantity of Input
at Standard Price)
Usage Variance
(2-3)
Budget
Variance (1-3)
9 -12
9 -13
Unfavorable
Unfavorable variances
variances
occur
occur whenever
wheneveractual
actual
prices
prices or
or usage
usage of
of inputs
inputs
are
are greater
greater than
than standard
standard
prices
prices or
or usage.
usage.
Favorable
Favorable variances
variances
occur
occur whenever
whenever the
the
opposite
opposite occurs.
occurs.
9 -14
Cost
x
x
x
x
$110,000
$100,000
x
x
$ 90,000
Time
9 -15
Variance
VarianceAnalysis:
Analysis: Materials
Materials and
and Labor
Labor
Actual production
48,500 bags of corn chips
Actual cost of corn 780,000 ounces of $0.0069 = $5,382
Actual cost of
inspection labor
Corn
Inspection labor
360 hours at $7.35 = $2,646
Actual Costs Budgeted Costs Total Variance
$5,382.00
$5,238.00
$144.00 U
2,646.00
2,376.50
269.50 U
Variance Analysis: Columnar Approach
AQ x AP
780,000 x 0.0069
$5,382
AQ x SP
780,000 x $.0.0060
$4,680
$702 U
Price Variance
SQ x SP
873,000 x $0.0060
$5,238
$558 F
Usage Variance
$144 U
Total Variance
9 -16
9 -17
Material
Material Price
Price Variance
Variance
MPV = (AP – SP)AQ
The actual
The actual
The standard
quantity of
price per price
unit per unit
material used
9 -18
Material
Material Price
Price Variance
Variance
MPV = (AP – SP)AQ
= ($0.0069 – $0.0060)780,000
= $0.0009 x 780,000
= $702 U
Percent
Percent of
of SP
SPxx SQ
SQ == $702/$4,680
$702/$4,680 == 15%
15%
9 -19
Direct
Direct Materials
Materials Usage
Usage Variance
Variance
MUV = (AQ – SQ)SP
The standard
The actual
The standard
quantity
of
quantity of
price per unit
materials
materials used
allowed for the
actual output
9 -20
Direct
Direct Materials
Materials Usage
Usage Variance
Variance
MUV = (AQ – SQ)SP
= (780,000 – 873,000)($0.006)
= 93,000 x $0.006
= $558 F
Percent of SQ x SP = $558/$5,238 = 10.7%
9 -21
Labor
Labor Rate
Rate Variances
Variances
LRV = (AR – SR)AH
The actual
The actual
The standard
hourly wage
direct labor
hourly wage
rate
rate hours used
9 -22
Labor
Labor Rate
Rate Variances
Variances
LRV = (AR – SR)AH
= ($7.35 – $7.00)360
= $0.35 x 360
= $126 U
Percent of SR x SH = $126/$2,520 = 5%
Labor Variances: Columnar Approach
AH x AR
360 x $735
$2,646
AH x SR
360 x $7.00
$2,520
$126 U
Rate Variance
SH x SR
339.5 x $7.00
$2,376.50
$143.50 U
Efficiency Variance
$269.50 U
Total Variance
9 -23
9 -24
Labor
Labor Efficiency
Efficiency Variances
Variances
LEV = (AH – SH) SR
The actual
The standard
The standard
direct labor
hourly wage
direct labor
hours used
hours that rate
should have
been used
9 -25
Labor
Labor Efficiency
Efficiency Variances
Variances
LEV = (AH – SH)SR
= (360 – 339.5)$7
= 20.5 x $7
= $143.50 U
Percent of SH x SR = $143.50/$2,376.50 = 6%
9 -26
Variable Overhead Variances
Variable overhead rate (standard)
Actual variable overhead costs
Actual hours worked
Bags of chips produced
Hours allowed for production
Applied variable overhead
$3.85/DLH
$1,600
400
48,500
373.3
$1,456
Variable Overhead Variances: Columnar Approach
Actual VO
$1,600
VO Rate x
Actual Hours
$1,540
$60 U
Spending
Variance
VO Rate x
Standard Hours
$1,456
$84 U
Efficiency Variance
$144 U
Total Variance
9 -27
9 -28
Variable
Variable Overhead
Overhead
Spending
Spending Variances
Variances
VOSV = (AVOR x AH) – (SVOR x AH)
= (AVOR – SVOR)AH
= ($4.00 – $3.85)400
= $60 U
9 -29
Crunch Chips, Inc.
Flexible Budget Performance Report
For the Week Ended March 8, 2004
Cost
Formula
Actual
Costs
Spending
Budget Variance
$3.00
$1,190
$1,200
$10 F
Electricity
0.78
385
312
73 U
Water
0.07
25
28
3 F
$3.85
$1,600
$1,540
$60 U
Gas
Total cost
9 -30
Crunch Chips, Inc.
Performance Report
For the Week Ended March 8, 2004
Actual
Cost
Formula Costs
Gas
Budget
for
Spending Standard Efficiency
Budget Variance Hours Variance
$3.00
$1,190
$1,200
$10 F
$1,135
$65 U
Electricity
0.78
385
312
73 U
295
17 U
Water
0.07
25
28
3 F
26
2U
$3.85
$1,600
$1,540
$60 U
$1,456
$84 U
Total cost
9 -31
Fixed Overhead Variances
Budgeted or Planned Items
Budgeted fixed overhead
$749,970
Practical activity
23,400 direct labor hours
Standard fixed overhead rate
$32.05
Hours allowed toActual
produce
3,000,000 bags of chips:
Results
0.078 x 3,000,000 = $23,400
Actual production
2,750,000 bags of chips
Actual fixed overhead cost
$749,000
Standard hours allowed for actual
production
21,450
9 -32
Total Fixed Overhead Variances
Applied fixed = Standard fixed overhead rate
overhead
x Standard hours
= $32.05 x 21,450
= $687,473 (rounded)
Total fixed = $749,000 – $687,473
overhead variance
= $61,527 underapplied
Fixed Overhead Variances: Columnar Approach
Budgeted FO
$749,970
Actual FO
$749,000
$970 F
Spending
Variance
Applied FO
$687,473
$62,497 U
Volume
Variance
$61,527 U
Total Variance
9 -33
9 -34
Crunch Chips, Inc.
Performance Report
For the Year Ended 2004
Fixed
Overhead Items
Depreciation
Salaries
Taxes
Insurance
Total fixed overhead
Actual
Costs
$530,000
Budgeted
Cost
Variance
$530,000 $ ----
159,370
159,970
600 F
50,500
50,000
500 U
9,130
10,000
870 F
$749,000
$749,970
$970 F
Volume Variance
9 -35
Volume variance = $32.05(23,400 – 21,450)
= ($32.05 x 23,400) – ($32.05 x 21,450)
= $749,970 – $687,473
= Budgeted fixed overhead – Applied
fixed overhead
= $62,497 U
9 -36
Appendix:
Accounting for
Variances
9 -37
The
The actual
actual price
price isis $0.0069
$0.0069 per
per ounce
ounce of
of
corn
corn and
and standard
standard price
price isis $0.0060,
$0.0060, and
and
780,000
780,000 ounces
ounces of
of corn
corn are
are purchased.
purchased.
Materials Inventory
4 680 00
The receiving report and the invoice are
Materials Price Variance
702 00
used to record the receipt of the
Accounts Payable
merchandise
and to control the payment.
Material
Material Price
PriceVariance
Variance
5 382 00
9 -38
During
During the
the period
period 780,000
780,000 ounces
ounces of
of corn
corn
isis placed
placed into
into production.
production. The
The
standard
standard quantity
quantity isis 873,000
873,000 ounces,
ounces,
and
and standard
standard price
price isis $0.006.
$0.006.
Work in Process
5 238 00
The receiving report and the invoice are
Materials Usage Variance
used to record the receipt of the
Materials
Inventory
merchandise
and to control the payment.
Material
Material Usage
UsageVariance
Variance
558 00
4 680 00
During
During the
the period
period the
the firm
firm has
has 360
360 actual
actual
inspection
inspection hours,
hours, while
while the
the standard
standard hours
hours
for
for the
the units
units produced
produced isis 339.5
339.5 hours.
hours. The
The
actual
actual rate
rate isis $7.35
$7.35 per
per hour
hour while
while the
the
standard
standard rate
rate isis $7.00
$7.00 per
per hour.
hour.
Work in Process
9 -39
2 376 00
The receiving report and the invoice are
Labor Efficiency Variance
143 50
used to record the receipt of the
Labormerchandise
Rate Variance and to control the payment.
126 00
Accrued Payroll
2 646 00
Labor
LaborVariances
Variances
9 -40
At
At the
the end
end of
of the
the year,
year, the
the variances
variances for
for
materials
materials and
and labor
labor are
are usually
usually closed
closed to
to
Cost
Cost of
of Goods
Goods Sold.
Sold.
Cost of Goods Sold
971 50
The receiving report and the invoice are
Material Price Variance
used to record the receipt of the
Labor
Efficiency Variance
merchandise
and to control the payment.
Labor Rate Variance
Closing
ClosingVariances
Variances
702 00
143 50
126 00
9 -41
At
At the
the end
end of
of the
the year,
year, the
the variances
variances for
for
materials
materials and
and labor
labor are
are usually
usually closed
closed to
to
Cost
Cost of
of Goods
Goods Sold.
Sold.
Material Usage Variance
558 00
The receiving report and the invoice are
Cost of Goods Sold
used to record the receipt of the
merchandise and to control the payment.
Closing
ClosingVariances
Variances
558 00
9 -42
Chapter Nine
The
The End
End
9 -43