Budgeting and Variance Analysis: Impact on Human Behavior and

School: Missouri State University, Springfield - Course: ACC 211 - Subject: Accounting

Sectors who budget -Budget impact on human behavior -Static vs. flexible budgets -Master budget components; Operating and financial budgets components/flow -Sales budget; Planned sales units/dollars -Production budget; Planned production units (modifying from sales volume) -Direct materials purchases budget; Planned purchase quantities and costs -Chapter 1 inventory formulas -Expected cash receipts and payments -Excess or deficiency of cash Chapter 9 -Ideal vs. normal standards -Standard cost components (standard price and standard quantity; responsibility) -Favorable vs. unfavorable variances -Direct materials variances (price and quantity) -Direct labor variances (rate and time) Formulas:

*Only the starred ones will be given to you on exam day. You'll need to print the formula sheet that will be posted separately on Blackboard or write the formulas, and nothing else, on a blank piece of paper.* Budgeting 1.*Units to Be Produced = Expected Unit Sales + Units in Desired Ending Inventory - Units in Beginning Inventory 2.*Direct Materials Needed for Production = Units to Be Produced x Direct Materials Needed per Unit 3.Direct Materials Purchases = Direct Materials Needed for Production + Direct Materials in Desired Ending Inventory - Direct Materials in Beginning Inventory 4.Cash Increase (Decrease) = Expected Cash Receipts - Expected Cash Payments 5.Ending Cash Balance = Cash Increase (Decrease) + Beginning Cash Balance 6.Excess (Deficiency) of Cash = Ending Cash Balance - Minimum Cash Balance Variance Analysis 7.Actual Cost = Actual Price x Actual Quantity 8.Flexible Cost = Standard Price x Actual Quantity 9.Standard Cost = Standard Price x Price Standard Quantity 10. Actual Quantity for Units Produced = Actual Usage per Unit x Actual Output 11. *Standard Quantity for Units Produced = Standard Usage per Unit x Actual Output 12. Total Cost Variance = Actual Cost - Standard Cost a.Or: (Actual Price x Actual Quantity) - (Standard Price x Standard Quantity) 13. Total Direct Materials Cost Variance = Price Variance + Quantity Variance 14. *Materials Price Variance = (Actual Price - Standard Price) x Actual Quantity 15. Materials Quantity Variance = (Actual Quantity - Standard Quantity) x Standard Price 16. Total Direct Labor Cost Variance = Rate Variance + Time Variance 17. Labor Rate Variance = (Actual Rate - Standard Rate) x Actual Hours 18. *Labor Time Variance = (Actual Hours - Standard Hours) x Standard Rate