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Cover
Accounting: What the Numbers Mean, 5/e
David H. Marshall, Millikin University
Wayne W. McManus, International College of the Cayman Islands
Daniel F. Viele, Webster University
Cost Analysis for Control

Chapter 15 Outline


Cost Classifications

  1. Relationship of Cost to Volume of Activity
    1. Variable cost.
    2. Fixed cost.
    3. Mixed cost.
  2. According to a Time-Frame Perspective
    1. Controllable cost
    2. Noncontrollable cost

Performance Reporting

  1. Characteristics of the Performance Report
    1. Column headings.
    2. Variances.
      1. Reasons for reporting variances.
      2. Management by exception principle.
    3. Issues in the design of performance reports.
  2. Reporting for Segments of an Organization
    1. Segments are responsibility centers.
      1. Cost center.
      2. Profit center.
      3. Investment center.
    2. Hazards of arbitrary allocation of common costs.
    3. Direct and common fixed expenses.
    4. Segment margin.
  3. The Flexible Budget
    1. Required to have a meaningful performance report.

Analysis of Standard Cost Variances

  1. Components
    1. Quantity variance.
    2. Cost per unit of input variance.
  2. Favorable/Unfavorable Label
    1. Arithmetic difference relative to budget.
    2. Label not necessarily synonymous with "good" or "bad."
  3. Name of Variance Related to the Input
    1. Raw materials--usage and price.
    2. Direct labor--efficiency and rate.
    3. Variable overhead--efficiency and spending.
  4. General Model for Calculating Variances
  5. Variance Calculations Illustrated
  6. Analysis of Fixed Overhead Variance
  7. Accounting for Variances








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