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Standard Costing: Manufacturing Overhead Standards

Manufacturing overhead standards help control costs and promote efficiency. There are various types of variances used to analyze overhead performance including material, labor, spending, volume, and efficiency variances. Variances can be categorized as one-way, two-way, three-way, or four-way factors depending on how many elements of standard costs and actual results are considered in the calculation.

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Crizza Demecillo
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100 views2 pages

Standard Costing: Manufacturing Overhead Standards

Manufacturing overhead standards help control costs and promote efficiency. There are various types of variances used to analyze overhead performance including material, labor, spending, volume, and efficiency variances. Variances can be categorized as one-way, two-way, three-way, or four-way factors depending on how many elements of standard costs and actual results are considered in the calculation.

Uploaded by

Crizza Demecillo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Manufacturing Overhead

Standards
STANDARD COSTING
Padilla, Ira Kaye B.
Strategic Cost Management BSA 2A B42  Control Cost
 Promote Efficiency One Way Factor
Title: Standard Costing Conceptual Framework
Actual Factory Overhead Applied Factory Overhead

Direct Material Standards Total OH Variance

Direct Labor Standards Two Way Factor

Budget Allowed Standard Hour


Material Price Material Actual Factory
on Standard ×
(Purchased) Efficiency Overhead
Hours FOH Rate
Variance (Usage) Variance
Labor Rate Labor Efficiency
Variance Variance
Controllable Variance Volume Variance
Actual Price Standard Price Standard Price
× × × Three Way Factor
Actual Quantity Actual Quantity Standard Quantity Actual Price Standard Standard
× Price Price Budget Budget
Actual Standard Hour
Actual × × Allowed on Allowed on
Factory ×
Quantity Standard Actual Hours Standard
Actual Overhead FOH Rate
Hours
Actual Costs < Standard Costs Quantity Quantity

Spending Variance Variable Volume Variance


Efficiency
Favorable Variance Variance
Four Way Factor

Actual Costs > Standard Costs Fixed OH Rate Variable OH Rate Variable OH rate
Actual Budgeted Fixed @ Actual ×
× ×
Fixed OH Normal Capacity Variable OH Standard Hours
Standard Hours Actual Hours

Unfavorable Variance Fixed Spending Variance Volume Variance Variable Spending Variance Variable OH Efficiency Variance

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