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Balanced Scorecard
Managing and Setting Standards
Standard Costs
Variances
Advantages / Disadvantages
100
Profit growth, revenue growth, return on assets.
What are financial measures?
100
A budget for the production of one unit of product or service.
What is a standard cost?
100
The amount of direct material normally required to produce a finished product, including allowances for normal waste.
What is a standard direct-material quantity?
100
Quantity purchased (Actual price - Standard price)
What is direct-material price variance?
100
Sensible cost comparisons and management by exception.
What are advantages?
200
Transaction efficiency and loan-processing efficiency.
What are internal operations goals?
200
The comparison of actual cost with budgeted (or standard) cost.
What is a cost variance?
200
The total delivered cost, after subtracting purchase discounts.
What is a standard direct-material price?
200
Standard price (Actual quantity - standard quantity)
What is the direct-material quantity variance?
200
Performance evaluation and motivation.
What are advantages?
300
Motivated and prepared employees.
What is a learning and growth goal?
300
The process of following up on only significant cost variances.
What is management by exception?
300
The number of direct-labor hours normally need to manufacture one unit of product.
What is the standard direct-labor quantity?
300
Actual hours (Actual hourly rate - standard hourly rate)
What is the direct-labor rate variance?
300
Costs are compiled at the aggregate level.
What is a disadvantage?
400
Customer satisfaction and market share.
What are customer perspective goals?
400
The standard that can be attained only with peak efficiency, lowest input prices, best-quality materials, and no disruption in production.
What is a perfection standard?
400
The total hourly cost of compensation, including fringe benefits.
What is the standard direct-labor rate?
400
Standard hourly rate (Actual hours - Standard hours)
What is the direct-labor efficiency variance?
400
Focus is on cost and efficiency of direct labor, which is less important in current production.
What is a disadvantage?
500
Standards that are as tight as possible, but still attainable.
What are practical standards?
500
Name three different guidelines for determining significant variances:
What are variance size, recurrence, trends, controllability, and favorable variances