A number of terms are listed below:
Agility ..................value-added cost
Capacity ..................capacity cost
non-value-added cost ............denominator-level variance
fixed overhead rate variance...........production-volume variance
variable overhead efficiency variance......variable overhead rate variance
Select the terms from the above list to complete the following sentences.
Interpretation of variances strategically means management teams must place their internal performance relative to their competitors and to what their customers value. Decisions about _____________incur ___________________of ownership and maintenance for the long term. To the customer, however, the cost of unused capacity is a _ __ _ _ _ _ __ _ _ _ __ _ _ _ _ __ _ _ for which they will not pay. This cost arises because the quantity produced is less than the capacity available. The cost is fixed therefore the burden assigned to each actual unit produced is higher than it should be. This unfavourable outcome is a _____________________. It is also referred to as the ________________________ and is an underallocation of capacity costs that will persist until consumer demand, actual production, and available capacity intersect. But fixed costs also include contractual costs such as salaries and regulatory costs of taxes. These costs can change unexpectedly and will result in a ______________________. Equipment also requires maintenance which, along with custodial and security costs, are required and shared resources that benefit all outputs. When the actual measure of benefit provided exceeds the budget, what arises is an unfavourable ________________________________. When the actual cost per unit of benefit provided exceeds budget, there arises an unfavourable _______________________. Both are underallocations of variable overhead cost.

  • CreatedJuly 31, 2015
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