Beruflich Dokumente
Kultur Dokumente
Balanced Scorecard
Chapter 10
Standard Costs
Standard Costs
Standard
Amount
Direct
Material
Direct Manufacturing
Labor Overhead
Take
Identify Receive corrective
questions explanations actions
Conduct next
Analyze period’s
variances operations
Prepare standard
Begin
cost performance
report
Engineer Managerial
Accountant
McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.
10-7
Learning Objective 1
Price Quantity
Standards Standards
Setting Standards
Six
Six Sigma
Sigma advocates
advocates have
have sought
sought to
to
eliminate
eliminate all
all defects
defects and
and waste,
waste, rather
rather than
than
continually
continually build
build them
them into
into standards.
standards.
As
As aa result
result allowances
allowances for for waste
waste and
and
spoilage
spoilage that
that are
are built
built into
into standards
standards
should
should bebe reduced
reduced overover time.
time.
Rate Time
Standards Standards
Rate Activity
Standards Standards
The
The purchasing
purchasing manager
manager is is responsible
responsible for
for raw
raw
material
material purchase
purchase prices
prices and
and the
the production
production manager
manager
is
is responsible
responsible for
for the
the quantity
quantity ofof raw
raw material
material used.
used.
The
The buying
buying and
and using
using activities
activities occur
occur atat different
different times.
times.
Raw
Raw material
material purchases
purchases may
may be be held
held inin inventory
inventory forfor aa
period
period of
of time
time before
before being
being used
used inin production.
production.
McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.
10-15
Variance Analysis
Variance Analysis
Learning Objective 2
Material Variances
The
The standard
standard price
price is
is used
used to
to compute
compute the
the quantity
quantity variance
variance
so
so that
that the
the production
production manager
manager isis not
not held
held responsible
responsible for
for
the
the purchasing
purchasing manager’s
manager’s performance.
performance.
McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.
10-32
Hanson’s
Hanson’s material
material price
price variance
variance (MPV)
(MPV)
for
for the
the week
week was:
was:
a.
a. $170
$170 unfavorable.
unfavorable.
b.
b. $170
$170 favorable.
favorable.
c.
c. $800
$800 unfavorable.
unfavorable.
d.
d. $800
$800 favorable.
favorable.
Hanson’s
Hanson’s material
material price
price variance
variance (MPV)
(MPV)
for
for the
the week
week was:
was:
a.
a. $170
$170 unfavorable.
unfavorable.
b.
b. $170
$170 favorable.
favorable.
c.
c. $800
$800 unfavorable.
unfavorable.
MPV = AQ(AP - SP)
d. MPV = 1,700 lbs. × ($3.90 - 4.00)
d. $800
$800 favorable.
favorable.
MPV = $170 Favorable
Hanson’s
Hanson’s material
material quantity
quantity variance
variance (MQV)
(MQV)
for
for the
the week
week was:
was:
a.
a. $170
$170 unfavorable.
unfavorable.
b.
b. $170
$170 favorable.
favorable.
c.
c. $800
$800 unfavorable.
unfavorable.
d.
d. $800
$800 favorable.
favorable.
Hanson’s
Hanson’s material
material quantity
quantity variance
variance (MQV)
(MQV)
for
for the
the week
week was:
was:
a.
a. $170
$170 unfavorable.
unfavorable.
b.
b. $170
$170 favorable.
favorable.
c.
c. $800
$800 unfavorable.
unfavorable.
d.
d. $800
$800 favorable.
favorable.
MQV = SP(AQ - SQ)
MQV = $4.00(1,700 lbs - 1,500 lbs)
MQV = $800 unfavorable
McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.
10-38
Actual Quantity
Used Standard
Quantity
× ×
Standard Price Standard Price
1,700 lbs. 1,500 lbs.
× ×
$4.00 per lb. $4.00 per lb.
= $6,800 = $6,000
Quantity variance is
unchanged because
actual and standard Quantity variance
quantities are unchanged. $800 unfavorable
McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.
10-42
Learning Objective 3
Quality of production
supervision.
Quality of training
provided to employees.
Production Manager
Hanson’s
Hanson’s labor
labor rate
rate variance
variance (LRV)
(LRV) for
for
the
the week
week was:
was:
a.
a. $310
$310 unfavorable.
unfavorable.
b.
b. $310
$310 favorable.
favorable.
c.
c. $300
$300 unfavorable.
unfavorable.
d.
d. $300
$300 favorable.
favorable.
Hanson’s
Hanson’s labor
labor rate
rate variance
variance (LRV)
(LRV) for
for
the
the week
week was:
was:
a.
a. $310
$310 unfavorable.
unfavorable.
b.
b. $310
$310 favorable.
favorable.
c. LRV = AH(AR - SR)
c. $300
$300 unfavorable.
unfavorable.
LRV = 1,550 hrs($12.20 - $12.00)
d.
d. $300
$300 favorable.
favorable.
LRV = $310 unfavorable
Hanson’s
Hanson’s labor
labor efficiency
efficiency variance
variance (LEV)
(LEV)
for
for the
the week
week was:
was:
a.
a. $590
$590 unfavorable.
unfavorable.
b.
b. $590
$590 favorable.
favorable.
c.
c. $600
$600 unfavorable.
unfavorable.
d.
d. $600
$600 favorable.
favorable.
Hanson’s
Hanson’s labor
labor efficiency
efficiency variance
variance (LEV)
(LEV)
for
for the
the week
week was:
was:
a.
a. $590
$590 unfavorable.
unfavorable.
b.
b. $590
$590 favorable.
favorable.
c.
c. $600
$600 unfavorable.
unfavorable.
d.
d. $600
$600 favorable.
favorable.
LEV = SR(AH - SH)
LEV = $12.00(1,550 hrs - 1,500 hrs)
LEV = $600 unfavorable
McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.
10-55
Learning Objective 4
Hanson’s
Hanson’s spending
spending variance
variance (VOSV)
(VOSV) for
for
variable
variable manufacturing
manufacturing overhead
overhead for
for
the
the week
week was:
was:
a.
a. $465
$465 unfavorable.
unfavorable.
b.
b. $400
$400 favorable.
favorable.
c.
c. $335
$335 unfavorable.
unfavorable.
d.
d. $300
$300 favorable.
favorable.
Hanson’s
Hanson’s spending
spending variance
variance (VOSV)
(VOSV) forfor
variable
variable manufacturing
manufacturing overhead
overhead for
for
the
the week
week was:
was:
a.
a. $465
$465 unfavorable.
unfavorable.
b.
b. $400
$400 favorable.
favorable.
VOSV = AH(AR - SR)
c.
c. $335
$335 unfavorable.
unfavorable.
VOSV = 1,550 hrs($3.30 - $3.00)
d.
d. $300 favorable.VOSV = $465 unfavorable
$300 favorable.
Hanson’s
Hanson’s efficiency
efficiency variance
variance (VOEV)
(VOEV) forfor
variable
variable manufacturing
manufacturing overhead
overhead for
for the
the
week
week was:
was:
a.
a. $435
$435 unfavorable.
unfavorable.
b.
b. $435
$435 favorable.
favorable.
c.
c. $150
$150 unfavorable.
unfavorable.
d.
d. $150
$150 favorable.
favorable.
Hanson’s
Hanson’s efficiency
efficiency variance
variance (VOEV)
(VOEV) forfor
variable
variable manufacturing
manufacturing overhead
overhead for
for the
the
week
week was:
was:
a.
a. $435
$435 unfavorable.
unfavorable.
b.
b. $435
$435 favorable.
favorable. 1,000 units × 1.5 hrs per unit
c.
c. $150
$150 unfavorable.
unfavorable.
d.
d. $150
$150 favorable.
favorable.
VOEV = SR(AH - SH)
VOEV = $3.00(1,550 hrs - 1,500 hrs)
VOEV = $150 unfavorable
McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.
10-67
Larger variances, in
How do I know dollar amount or as
which variances to a percentage of the
investigate? standard, are
investigated first.
Favorable Limit
• •
• • •
Desired Value
• •
Unfavorable Limit •
•
1 2 3 4 5 6 7 8 9
Variance Measurements
Advantages
Enhances
Simplified responsibility
bookkeeping accounting
Continuous
Invalid assumptions improvement may
about the relationship be more important
between labor than meeting standards.
cost and output.
McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.
10-72
Learning Objective 5
Understand how a
balanced scorecard
fits together and
how it supports a
company’s strategy.
Management
Management translates
translates its
its strategy
strategy into
into
performance
performance measures
measures that
that employees
employees
understand
understand and
and accept.
accept.
Financial Customers
Performance
measures
Internal Learning
business and growth
processes
McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.
10-74
The Balanced Scorecard: From Exhibit
10-11
Financial
Financial measures
measures are are lag
lag indicators
indicators that
that summarize
summarize
the
the results
results of
of past
past actions.
actions. Non-financial
Non-financial measures
measures are
are
leading
leading indicators
indicators of
of future
future financial
financial performance.
performance.
Top
Top managers
managers are
are ordinarily
ordinarily responsible
responsible forfor financial
financial
performance
performance measures
measures –– not
not lower
lower level
level managers.
managers.
Non-financial
Non-financial measures
measures are
are more
more likely
likely to
to be
be
understood
understood and
and controlled
controlled by
by lower
lower level
level managers.
managers.
McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.
10-76
AA personal
personal scorecard
scorecard should
should contain
contain measures
measures that
that can
can be
be
influenced
influenced by
by the
the individual
individual being
being evaluated
evaluated and
and that
that
support
support the
the measures
measures in in the
the overall
overall balanced
balanced scorecard.
scorecard.
McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.
10-77
Incentive compensation
should be linked to
balanced scorecard
performance measures.
Jaguar Example
Profit
Financial
Contribution per car
Internal
Business Number of Time to
options available install option
Processes
Customer satisfaction
with options Satisfaction
Increases
Number of Time to
options available install option
Employee skills in
installing options
McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.
10-82
The Balanced Scorecard
Jaguar Example
Profit
Results
Contribution per car Contribution
Increases
Customer satisfaction
with options Satisfaction
Increases
Number of Time to
options available install option Time
Decreases
Employee skills in
installing options
McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.
10-83
The Balanced Scorecard
Jaguar Example
Results
Profit Profits
Increase
If number
Contribution per car Contribution
of cars sold Increases
and contribution
Cars Sold
per car increase, Number of cars sold
Increases
profits
increase. Customer satisfaction
with options
Number of Time to
options available install option
Employee skills in
installing options
McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.
10-84
35
Time to Install in Minutes
30
25
20
15
10
5
0
1 2 3 4 5 6 7 8 9 10
Week
Learning Objective 6
Throughput Time
Throughput Time
Quick Check
AA TQM
TQM team
team at
at Narton
Narton Corp
Corp hashas recorded
recorded the
the
following
following average
average times
times for
for production:
production:
Wait
Wait 3.0
3.0 days
days Move
Move 0.5
0.5 days
days
Inspection
Inspection 0.4
0.4 days
days Queue
Queue 9.3
9.3 days
days
Process
Process 0.20.2 days
days
What
What is
is the
the throughput
throughput time?
time?
a.
a. 10.4
10.4 days
days
b.
b. 0.2
0.2 days
days
c.
c. 4.1
4.1 days
days
d.
d. 13.4
13.4 days
days
McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.
10-89
Quick Check
AA TQM
TQM team
team at
at Narton
Narton Corp
Corp hashas recorded
recorded the
the
following
following average
average times
times for
for production:
production:
Wait
Wait 3.0
3.0 days
days Move
Move 0.5
0.5 days
days
Inspection
Inspection 0.4
0.4 days
days Queue
Queue 9.3
9.3 days
days
Process
Process 0.20.2 days
days
What
What is
is the
the throughput
throughput time?
time?
a.
a. 10.4
10.4 days
days
b.
b. 0.2
0.2 days
Throughput days= Process + Inspection + Move + Queue
time
c.
c. 4.1 days= 0.2 days + 0.4 days + 0.5 days + 9.3 days
4.1 days
= 10.4 days
d.
d. 13.4
13.4 days
days
McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.
10-90
Quick Check
AA TQM
TQM team
team at
at Narton
Narton Corp
Corp hashas recorded
recorded the
the
following
following average
average times
times for
for production:
production:
Wait
Wait 3.0
3.0 days
days Move
Move 0.5
0.5 days
days
Inspection
Inspection 0.4
0.4 days
days Queue
Queue 9.3
9.3 days
days
Process
Process 0.20.2 days
days
What
What is
is the
the Manufacturing
Manufacturing Cycle
Cycle Efficiency?
Efficiency?
a.
a. 50.0%
50.0%
b.
b. 1.9%
1.9%
c.
c. 52.0%
52.0%
d.
d. 5.1%
5.1%
McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.
10-91
Quick Check
AA TQM
TQM team
team at
at Narton
Narton Corp
Corp hashas recorded
recorded the
the
following
following average
average times
times for
for production:
production:
Wait
Wait 3.0
3.0 days
days Move
Move 0.5
0.5 days
days
Inspection
Inspection 0.4
0.4 days
days Queue
Queue 9.3
9.3 days
days
Process
Process 0.20.2 days
days
What
What is
is the
the Manufacturing
Manufacturing Cycle
Cycle Efficiency?
Efficiency?
a.
a. 50.0%
50.0% MCE = Value-added time ÷ Throughput time
b.
b. 1.9%
1.9% = Process time ÷ Throughput time
c.
c. 52.0%
52.0% = 0.2 days ÷ 10.4 days
d.
d. 5.1%
5.1% = 1.9%
McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.
10-92
Quick Check
AA TQM
TQM team
team at
at Narton
Narton Corp
Corp hashas recorded
recorded the
the
following
following average
average times
times for
for production:
production:
Wait
Wait 3.0
3.0 days
days Move
Move 0.5
0.5 days
days
Inspection
Inspection 0.4
0.4 days
days Queue
Queue 9.3
9.3 days
days
Process
Process 0.20.2 days
days
What
What is
is the
the delivery
delivery cycle
cycle time?
time?
a.
a. 0.5
0.5 days
days
b.
b. 0.7
0.7 days
days
c.
c. 13.4
13.4 days
days
d.
d. 10.4
10.4 days
days
McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc.
10-93
Appendix 10A
Learning Objective 7
Material
Material Labor
Labor
AQ
AQ ×× AP
AP == $1,029
$1,029 AH
AH ×× AR
AR == $26,250
$26,250
AQ
AQ ×× SP
SP == $1,050
$1,050 AH
AH ×× SR
SR == $25,000
$25,000
SQ
SQ ×× SP
SP == $1,000
$1,000 SH
SH ×× SR
SR == $24,000
$24,000
MPV
MPV == $21
$21 FF LRV
LRV == $1,250
$1,250 UU
MQV
MQV == $50
$50 UU LEV
LEV == $1,000
$1,000 UU
Variable manufacturing
overhead variances are usually not
recorded in the accounts separately,
but are determined as part of the
general analysis of overhead that is
covered in the next chapter.
•• Inventories
Inventories are
are recorded
recorded at
at standard
standard cost.
cost.
•• Variances
Variances are
are recorded
recorded as
as follows:
follows:
Favorable
Favorable variances
variances are
are credits,
credits, representing
representing
savings
savings in
in production
production costs.
costs.
Unfavorable
Unfavorable variances
variances are
are debits,
debits, representing
representing
excess
excess production
production costs.
costs.
•• Standard
Standard cost
cost variances
variances are
are usually
usually closed
closed to
to
cost
cost of
of goods
goods sold.
sold.
Unfavorable
Unfavorable variances
variances increase
increase cost
cost of
of goods
goods sold.
sold.
Favorable
Favorable variances
variances decrease
decrease cost
cost of
of goods
goods sold.
sold.
End of Chapter 10