1. Variable cost variance analysis

2. Fixed manufacturing overhead variance analysis

3. Accounting treatment of standard costing

The 2008 textbook puts the fifth section of this chapter of 07, job costing, into the sixteenth chapter of 08 textbook

Section 1: Overview of cost control

I, Composition of the cost control system

An enterprise's cost control system includes: organizational system, information system, assessment system and reward system

Second, the principles of cost control

(a) economic principles

Economic principle means that the costs incurred for the implementation of cost control should not be more than the lost revenue due to the lack of control

1. Practicality: cost control should be able to play a role in reducing costs and correcting deviations, with practicality;

2. Management of exceptions: normal costs and expenses can be controlled from the simple, but pay special attention to a variety of exceptions;

3. Importance: the cost of the subtle tails, the amount of very small items of expense and matters unrelated to the overall situation can be omitted;

4. Flexibility: The cost control system should be flexible.

(B) the principle of localization

Cost control system must be individually designed to suit the characteristics of a particular enterprise, for the requirements of a particular department, for the requirements of the job and job responsibilities, for the characteristics of the cost items.

(C) the principle of full participation

The key to effective cost control is to mobilize the enthusiasm of all employees.

(D) leadership to promote the principle

Cost control involves all employees, and is not a welcome thing, must be * to promote.

2006 Single Choice, The following principles are not cost control principles ( ).

A. Economic principle

B. Adaptation to local conditions principle

C. Customer-centered principle

D. Full participation principle

Ans.

A. Cost control principles include: the economic principle, the local conditions principle, the full participation principle, and the leadership-driven principle

2004 Multiple Choice. The following statements about cost control are correct ()

A. A cost control system will be welcomed by most employees

B. Control can be skimped on very small cost items

C. There is no cost control model that applies to all businesses

D. The fundamental purpose of cost control is to identify those responsible for cost overruns

Answer:BC

Ans: Since cost control is designed for all employees and is not a popular thing to do, it must be *driven*.A is incorrect

The economic principle calls for the implementation of the principle of significance, which should be focused on important matters, and can be omitted from the cost of the subtle tails, the cost of a very small amount of the cost of the project and the matters of irrelevance.B is correct

> According to the principle of localization, the cost control system must be designed individually, and there is no cost control model that can be applied to all enterprises. C is correct

Cost control refers to the various methods of cost accounting, predetermining the cost limit, spending the costs and expenses according to the limit, comparing the actual costs with the cost limit, measuring the achievement and effect of the operating activities and correcting the unfavorable variances with the principle of management by exception to improve the efficiency of the work and achieve the goal of exceeding the expectation. efficiency of operations to achieve or exceed expected cost limits. Therefore, D is incorrect.

The difference between cost control and cost reduction

1. Cost reduction refers to efforts to continuously reduce costs. The continuous improvement and enhancement of competitors prompts every business to make continuous efforts to reduce costs in order to improve performance.

2. Difference between Cost Reduction and Cost Control

Different Objectives - Cost reduction aims at cost minimization

Cost control aims at accomplishing predetermined cost limits.

Difference in scope - Cost reduction is not limited to projects with cost limits, but involves all activities of the organization. Cost control is limited to projects with cost limits.

Difference in approach - cost reduction should include the right choice of business options, involving the process of making decisions, including cost forecasting and decision analysis.

Cost control is the process of implementing decisions in an effort to achieve cost limits.

Meaning is different --- cost reduction also includes the overall arrangement of costs, volume and revenue interrelationships, in order to seek revenue growth exceeds the growth of costs, to achieve relative cost savings, so it is also known as the relative cost control

Cost control refers to the reduction of the cost of the absolute amount of expenditure, so it is also known as the relative cost control

Cost control refers to the reduction of the cost of expenditure The absolute amount of cost control, so it is also known as absolute cost control.

Cost reduction in 2005 refers to the absolute amount of cost reduction expenditures, is absolute cost control. ()

Answer ×

Cost control refers to the absolute amount of cost reduction expenditure, so it is also known as absolute cost control; cost reduction also includes the co-ordination of the cost, quantity and revenue interrelationships, in order to seek revenue growth over the growth of costs, to achieve relative cost savings, so it is also known as relative cost control.

3, the basic principles of cost reduction

The basic principles of cost reduction: customer-centric

Systematic analysis of the whole process of cost generation

The main goal is to reduce the unit cost

To rely on their own strength to reduce costs

To continue to reduce the cost of

4, the main ways to reduce costs

The main ways to reduce costs

The main ways to reduce costs

Cost Control

Cost control is mainly a management problem, cost reduction is mainly a technical problem

Standard cost and its development

Section II standard cost and its development

First, the concept of the standard cost

1, the meaning of: the standard cost is developed through accurate investigation, analysis and technical determination, used to evaluate the actual cost, measure the efficiency of a projected cost. Work efficiency of an expected cost.

2, the implementation of the standard cost system generally has the following steps:

(1) the development of standard cost per unit of product;

cost standard = standard cost per unit of product = standard consumption per unit of product × standard unit price

(2) according to the actual production and cost standards to calculate the standard cost of the product (total cost);

standard cost = actual output x standard cost per unit of product

(3) Summarize and calculate the actual cost;

(4) Calculate the difference between the standard cost and the actual cost;

(5) Analyze the reasons for the cost difference, and if the standard cost is included in the bookkeeping system, also carry out the bookkeeping of the standard cost and its cost difference;

(6) Provide a cost control report to the person in charge of the cost Provide cost control reports.

Second, the classification of standard cost

(a) standard cost according to its formulation based on the level of production technology and management, divided into the ideal standard cost and normal standard cost;

1. Ideal standard cost

Ideal standard cost refers to the production conditions, the use of the existing scale and equipment can be achieved the lowest cost

The ideal standard cost is set on the basis of theoretical performance standards, ideal prices of factors of production and the level of utilization of production and operating capacity that may be achieved. Such a standard is difficult to become a reality and is unlikely to last even if it appears temporarily.

Its primary use is to provide a flawless target that reveals the potential for real cost reductions. It cannot be used as a basis for appraisal because it makes too high a claim.?

2. Normal Standard Cost

Normal standard cost is the standard cost that is formulated under the condition of good efficiency based on the consumption of factors of production that should generally be incurred in the next period, the projected price and the projected degree of utilization of production and operation capacity. Normal standard cost is widely used in the standard cost system. It has the following characteristics:

① it is a scientific method based on objective experiments and past practice formulated after thorough research, with objectivity and scientific;

② it excludes a variety of contingencies and unforeseen circumstances and retains the loss of the current conditions can hardly be avoided, on behalf of the level of consumption under normal circumstances, with the realism;

③ it is the cost that should be incurred, can be used as a yardstick for evaluating performance Costs, can be used as a yardstick for evaluating performance, and become a goal to urge workers to strive for, with incentives;

④ It can be used continuously in the level of process technology and management effectiveness level of change is not too big, do not need to be revised often, with stability.

(ii) standard cost according to its application period, divided into the current standard cost and basic standard cost.

1. The current standard cost

The current standard cost refers to the standard cost that should occur according to its applicable period of price, efficiency and utilization of production and operating capacity and other expected standard costs.

This standard cost can be the basis for evaluating the actual cost, and can also be used to cost inventory and sales.

2. Basic standard cost

The basic standard cost refers to the formulation, as long as there is no significant change in the basic conditions of production, there is no change in a standard cost.

The so-called major changes in the basic conditions of production refers to changes in the physical structure of the product, important changes in the price of raw materials and labor, production technology and process of fundamental changes.

Only when these conditions change does the basic standard cost need to be revised. As a result of changes in market supply and demand for changes in selling prices and changes in the degree of utilization of production and management capacity, due to changes in working methods and efficiency changes, etc., do not belong to the basic conditions of production changes, which do not need to revise the basic standard cost.

Since the basic standard cost is not revised in accordance with the actual situation of each period, it is not suitable to be used to directly evaluate the efficiency of work and the effectiveness of cost control.

2001 Multiple Choice. Basic standard cost does not need to be revised in the following situations ( ) situations

A. Changes in the physical structure of the product

B. Changes in the prices of important raw materials and labor

C. Changes in production techniques and technology

D. Changes in the degree of utilization of production capacity due to changes in the marketplace

Answer D

A basic standard cost is a standard cost that, once established, remains unchanged as long as there are no significant changes in the basic conditions of production. The so-called significant changes in the basic conditions of production refers to changes in the physical structure of the product, important changes in the prices of important raw materials and labor, and fundamental changes in production techniques and technology. Only when these conditions change, the basic standard costs need to be revised, due to changes in market supply and demand for changes in selling prices and changes in the degree of utilization of production capacity, does not belong to the basic conditions of production changes, so there is no need to revise the basic standard costs, so D is correct.

Third, the development of standard costs

The development of standard costs, usually first determine the standard cost of direct materials and direct labor, followed by the determination of the standard cost of manufacturing costs, and finally determine the standard cost per unit of product.

In the development, you need to determine the use of standards and price standards

The use of standards, including: material consumption per unit of product, direct labor hours per unit of product, etc.

Price standards, including: raw material prices, hourly wage rates, hourly manufacturing overhead allocation rate, etc.

This textbook describes the development of the standard cost of the normal

1, direct material Standard cost

(1) the amount of standard - standard consumption, is the existing technical conditions for the production of a unit of material required for the product, including essential consumption, as well as a variety of unavoidable losses

(2) the price standard -is expected to be the actual need to pay the next year, the unit cost of incoming materials, including the invoice price, freight, inspection and normal wear and tear, and other costs, is the full cost of obtaining materials

2, the standard cost of direct labor

(1) the standard of dosage-is the standard of a unit of product labor hours. Standard labor hours refers to the existing technical conditions of production, the time required to produce a unit of product, including direct processing operations essential time and the necessary intermittent and stoppage of work, such as, work breaks, adjustment of equipment time, unavoidable scrap consumption of labor hours, etc.

(2) price standard - is the standard wage rate. It may be a predetermined wage rate or a normal wage rate.

3, standard cost of manufacturing overhead

The standard cost of manufacturing overhead in each department is divided into two parts: the standard cost of variable manufacturing overhead and the standard cost of fixed manufacturing overhead

(1) the standard cost of variable manufacturing overhead

Usage standard - the standard of use. - the use of direct labor hours per unit of product standard, in the direct labor standard cost has been determined

Price standard - is the standard allocation rate of variable manufacturing overhead per labor hour

Variable Manufacturing Expense Standard Allocation Rate < /p>

= total budgeted variable manufacturing overhead/standard total direct labor hours

(2) Fixed manufacturing overhead standard cost

Usage standard --- the same as the usage standard of variable manufacturing overhead, and the two should be consistent, so as to facilitate the analysis of differences

Price standard---is the standard allocation rate per hour

Fixed manufacturing overhead standard allocation rate

= total fixed manufacturing overhead budget/standard total hours of direct labor

2005 Single ChoiceThe following statements regarding the development of normal standard costs are correct. The correct statement is ( ).

A. The price standard for direct materials does not include the inspection costs incurred for purchased materials

B. The standard man-hours for direct labor include downtime caused by natural disasters

C. The price standard for direct labor refers to the standard wage rate, which may be a predetermined rate or a normal rate

D. An enterprise may use machine man-hours in the as the quantity standard of variable manufacturing costs, and adopt direct labor hours as the quantity standard of fixed manufacturing costs

Answer C

A. The price standard of direct materials includes the invoice price, freight cost, inspection and normal wear and tear, and other costs, which is the full cost of obtaining the materials, so A is incorrect; the standard labor hours of direct labor refers to the time needed to produce a unit of the product under the existing technical conditions of production, including direct machining The time required for direct labor is the time needed to produce a unit of product under the existing production technology conditions, including the time essential for direct processing operations, as well as the necessary intervals and stoppages, such as work breaks, time for adjusting equipment, and unavoidable scrap hours, etc., which doesn't include stoppages caused by natural disasters, so B is incorrect; the price standard for direct labor refers to the standard wage rate, which may be a predetermined wage rate or a normal wage rate, so C is correct; Fixed manufacturing overhead usage standards and variable manufacturing overhead usage standards are the same, including direct labor hours, machine hours, other usage standards, etc., and both should be consistent in order to carry out variance analysis, so D error.

Section 3: Variance Analysis of Standard Costs

A standard cost is a target cost, and a variance occurs when the actual cost does not match the standard cost.

I. Calculation of variance in variable costs

Direct materials, direct labor and variable manufacturing overhead are all variable costs, the actual cost of which depends on the actual volume and actual price, the standard cost of the high and low depends on the standard volume and standard price, so its cost variance can be attributed to the price variance caused by price out of the standard and volume variance caused by the volume out of the standard in two categories.?

Cost variance = actual cost of actual production - standard cost of actual production?

= price variance + quantity variance?

Item Name of Usage Variance Name of Price Variance

Direct Material Usage Variance Price Variance

Direct Labor Efficiency Variance Work Efficiency Variance

Variable Manufacturing Costs Efficiency Variance Consumption Variance

(a) Calculate and analyze the cost variance of direct materials?

Material price variance = actual quantity x (actual price - standard price)?

Material Quantity Variance = (Actual Quantity - Standard Quantity) × Standard Price

Example 14-1

1. The material price variance is formed during the purchasing process, and it should not be the responsibility of the production department that consumes the material, but rather the purchasing department should account for it. Reasons for the discrepancy:

(1) Price changes of the supplier;

(2) Failure to purchase goods in accordance with the economic procurement lot;

(3) Failure to order in time resulting in emergency orders;

(4) Procurement of the nearer and farther away resulting in an increase in freight costs and transit costs, unnecessary and rapid means of transportation, violation of the contract fines, etc.

(5) Undertaking emergency orders caused by additional purchases, etc.

2, material quantity variance is formed in the process of material consumption, which reflects the production department's cost control performance.

(1) Negligence in operation causes an increase in scrap and waste;

(2) Workers are not careful with materials;

(3) Improvements in operating techniques result in savings in materials;

(4) The induction of new workers results in the use of more materials;

(5) Inapplicability of machines or tools results in an increase in the use of materials, etc.

(5) The use of materials in the production department is a major factor in the cost control performance of the production department, which reflects the cost control performance of the production department.