Overview
Module 08: Evaluating Variance from Standard Costs
Evaluating Variance from Standard Costs
Discuss the importance of evaluating variances from standard costs in managerial accounting. What are some reasons for variances, and how can they be addressed?
Directions:
- Discuss the concepts, principles, and theories from your textbook. Cite your textbooks and cite any other sources if appropriate.
- Your initial post should address all components of the question with a 500 word limit.
Standard Costs and Variance Analysis
Learning Outcomes
- Describe the purpose of standard costs used for manufacturing costs.
- Analyze the direct materials price and quantity variances and explain their significance.
- Appraise the direct labor rate and efficiency variances and explain their significance.
- Evaluate the variable manufacturing overhead rate and efficiency variances and explain their significance.
Readings
Required:
- Chapter 9 in Managerial Accounting
- Bragg, S. (n.d.). Standard cost variance. AccountingTools. https://www.accountingtools.com/articles/standard-cost-variance (seminal)
Recommended:
- Chapter 9 PowerPoint slides in Managerial Accounting
- Ching-Wen Kwang, & Slavin, A. (1962). The Simple Mathematics of Variance Analysis. Accounting Review, 37(3), 415.