8 9 Decision To Be Made 10 What is the sales outlook for the second half of the year given first half results? 11 Whethe

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8 9 Decision To Be Made 10 What is the sales outlook for the second half of the year given first half results? 11 Whether to reduce based on year to da budetaan? 12 Strak Consideration & PIS 13 Standard coccountingframework standard actual cos, budgeted/actual volumes, volume/agence) 14 15 Businesses need to undentand how efficiently they are operating and make tragetary and operational decisions to adjust to affently run their operation 16 As the world always charentaalne to understand how to aborterials, overall contin aligns wieciety standards 17 va result from a volumes offering from per expectations coming more units of resources te hours of labor, pounds of materials or paying more or less for units of resources an expected. 18 The fact that company paid more for direct labor can be decomposed to the following factors 19 The peale volume of products produced or ordees shipped required more labor 20 The mix of products produced or orders shipped required more labor 21 The staff was leficent than you spected 22 The company had to pay more for workers became a tight labor market 23 Standard Contourire permit wides to decompole variances from budgets into multiple cal factor 24 This decompaction makes it possible to make decisions and take action to remedy problems or capture opportunities 25 There is designed such that not in the assignment will not avalympic terrain 26 27 Standard Cont Accounting is a methodology used in manufacturing and other operation interve businesses to warehouses to analyse actual performance against a set of established standard 28 The standard presenta model gainst which actual cosa be analyzed and provide a framework to analyse variance from standard 29 This structure permits operating businessesecompose any variances bort favorable and unfavorable to various custal factors 30 This decomposition provides a framework to help companies to rent budgets 31 Thoughout the year corranesvetele volume forecasts and operating budgets for the balance of the year, 32 More importantly, this proces de prinders such as adding or reducing start 33 34 Standard cont accounting can be highly granular and opticed We present a simple example 35 You are the fundal analytata company at mas commenti pins 36 o company produces the product bronie inhver pitsand old 37 Your tomaty motoalang her hans vatished the following standard costs per un for each of the the products 38 Indiend way to eliminate wareness in production proces 39 They devi ficent wstems that mee worken, machine material information and energy to make a product or provide service of Labor Statistics 40 The standard unit costs have been established for the wepente como 41 42 Director The follow payroll benefit of the players directly related to the production of single unit of the product 43 Dect Me Puhased material consumed in the production is gunt of the product 44 Variable Overhead Overhead which doen by the val of production such an electric, direct person on the production line, uniforms for the production staff 45 FedOvet Overhead with hot driven by the level of production such a management, et officient 46 47 Brone Silver Gold 48 Director 52 23 23 49 Standard Con Direct Material 6 18 12 SO Per Unt Variable Overhed 13 > 51 hedOverhead 22 52 53 Standard Cont Accounting us that are the created in advance of a period 54 The based on a forecand volume of protection for each product SS The budget volumes permite asment of Mandard pennies that are not fully red and med S6dcore, the standard perpled by the budgeted volumes to develop the budget 57 S8 Your sowat wys the role and find the month 59 first standarts work to all the modules 60 wewnie fundamental understanding of years to deved but for the wonder and to decide whether te 61 the budget for the second half of the year 62 Inowractory workers directors to your restlook 63 Adjustadores da youtubyer outlook A welcomes the bow below 65'informats per you to witne opperboat can be copied down wnd acros 66 67 More Bore Sever God Total 68 Walet 300 125 150 69 70 Db 71 Buded OM 72 VV vad 73 Sards 74 75 76 கைப்பாவையாக பயாபாpaaran 77 78 79 Arthur BO 21

Sh + 79 At the end of the period the Actual Volumets produced are not 80 She Tool 81 Marth Bros 120 100 120 82 Actual Sales volumes 83 84 At this time the Actualmesatardando cal 85 himpans the perstatythetically should have been omased on the Ardent and the Standard Case Perunt 86 reforms in the green below to calculate the actuales Standard Conti 87 re 88 Gel To 89 Director 90 A Direct Material 91 Vome Variable Overhead 92 Standard Cost Feed 93 Total 94 95 on which product your cory actually and the most auto? 96 97 98 The Volume are the recente Almendrats the standard Post 99 per te bere expenses at would be expected because all the womes 100 Alive value is wat means that Actual per a less than the Budget 101 w formulieren bos below to the Volume Var 102 103 Bronce Total 104 Director 105 Volume De Men 106 Variable Var 107 Deted 108 To 109 110 al product which cost concentrate montane Vaanon? 111 112 113 During the end your company kost of the legemors moment 114 we will stomation to cope Vana 115 haded by you would be able to get produttive 116 How to keep the decidown, youtudded to do the only 117low the answered component 118 119 Brone Silver Gold 120 Director 121 Metal Actual 122 Experts Variable Overhead 3000 123 Fixed Ovet 124 2000 125 126 The Vannes are the presentadt 127 with the interne in expresen Add to become the produced 128 show you were the option of ES 129 Antive values favorable means that the actuales en el territ 130 words in the prenos below to balcolate the 131 132 Brone G Tool 133 Dedah 134 Death 135 Usap Varno Vaatteet 136 FO 137 Total 138 139 wake.com wage Vartal! 140 141 142 mandaly had the performance 143 A francia mare 146 Tual 146 147 148 349 Veche 150 151

The Usage Varances are the difference between the actual Expenses less the Actual Volumes at Standard Cost. It represents the difference in expenses between Actual Expenses and what should have been expected given the volumes actually produced it isolates how efficient you were in the consumption of resources A negative value is favorable as it means that the Actual expenses were less than would be expected. Write formulas in the green boxes below to calculate the Volume Variances. Bronze Silver Gold Total Usage Varlance Direct Labor Direct Materials Variable Overhead Foxed Overhead Total Across all products, which cost component had the most unfavorable Usage Variance? 0 in a manufacturing plant, typically accountants process the transactions that produce the standard cost reporting and financial analysts use this reporting to explain the perform 3 As a financial analyst, it is your job to utilize this information to explain (and hopefully improve the efficiency of the plant 156 35 Foral products and cost categories, during the first six months of the year what was the overal variance between Actual Expenses and Budget? 16 17 is this variance 'Favorable' or Unfavorable? 18 49 Based on the usage Variances, which cost component has the greatest opportunity to reduce ? 50 51 52 You are scheduled to meet with the President of the company. She is expecting you to propose decisions she might take and explain your thinking 53 Let's focus on dechions with respect to Direct labor 54 The first 6 month budget for Direct labor was 500.000 255 The month actualvolumes at standard cost for Direct Labor was 500,000 The 6 month volume variance for Direct Labor was 50,000 157 The 6 month actual expense for Direct Laborwa $15.000 158 The month usage Varunce for Direct Labor was 50.000 159 The orginal sales budget the one made before the year began) for volumes for the second six months were exactly the same as for the fint se months 160 With the experience of the first six months you need to revise the volume forecast for the second six month 161 You have prepared the following revised forecast and are proposing it be accepted as the revised budget 162 163 Bronte Silver Gold Total Original Budget Second Sl Months 100 125 150 375 165 Actual Results First Months 170 100 390 166 Revised Forecast Second Six Months 140 110 130 380 167 168 Based on the Revised Forecast you need to project the Direct Laborat Standard Costs required. 169 170 Brone Silver Gold Total 171 Direct labor 172 173 However, if your Direct labor staffing remains at the same level as the first half of the year it will run at $15.000 174 Your proposal to the President of the company should be to reduce staff to adjust for 175 The required staffing for the forecasted volumes at standard costs during the second half of the year do not justify the staffing required at actual volumes during the finthall 176 The direct laborusage variance during the finthat of the year was unfavorable and that the company needs to implement efficiency improvements to achieve the standards 177 178 179 180 181 182 183 184 185 164 320