Problem
3: Discuss the changes that would occur in Figure 4 below if the company in question used an actual costing process instead of a standard cost process: Then, redraw the diagram with the changes youve identified
General ledger process GL cost of goods completed update GL standard costs applied update Production work centers Move ticket data 40 NOTES: @ The work-in-process data reflect standard costs. b Assuming that MOH is applied on the basis of DL hours or DL dollars, the total standard DL hours (or dollars) would be obtained from the work-in-process file. Standard MOH rate per hour Close manufacturing orders 1.0 Record standard costs Work-in-process inventory data a Standard RM issue notice Final move ticket data Inventory process Std. DL hours Production work centers KEY: RM = Raw materials DL = Direct labor MOH = Manufacturing overhead Std. = Standard UC = Unit cost (per unit of RM or per hour of DL) Standard cost master data Employee/payroll master data Excess RM issue notice Std. UC Std. UC Actual hourly pay rates RM returned notice Job time data Work-in-process inventory data a 20 3.0 Compute Compute RM quantity variance General ledger master data Actual MOH incurred Flexible budgets variances GL RM variances update GL DL variances update DL variances report MOH variances report 5.0 Compute MOH variances Budgets master data RM variance report General ledger Various managers GL MOH variances update Standard cost master data General ledger process Figure 4: Level 0 DFD - Cost Accounting: Variance analysis General ledger process GL cost of goods completed update GL standard costs applied update Production work centers Move ticket data 40 NOTES: @ The work-in-process data reflect standard costs. b Assuming that MOH is applied on the basis of DL hours or DL dollars, the total standard DL hours (or dollars) would be obtained from the work-in-process file. Standard MOH rate per hour Close manufacturing orders 1.0 Record standard costs Work-in-process inventory data a Standard RM issue notice Final move ticket data Inventory process Std. DL hours Production work centers KEY: RM = Raw materials DL = Direct labor MOH = Manufacturing overhead Std. = Standard UC = Unit cost (per unit of RM or per hour of DL) Standard cost master data Employee/payroll master data Excess RM issue notice Std. UC Std. UC Actual hourly pay rates RM returned notice Job time data Work-in-process inventory data a 20 3.0 Compute Compute RM quantity variance General ledger master data Actual MOH incurred Flexible budgets variances GL RM variances update GL DL variances update DL variances report MOH variances report 5.0 Compute MOH variances Budgets master data RM variance report General ledger Various managers GL MOH variances update Standard cost master data General ledger process Figure 4: Level 0 DFD - Cost Accounting: Variance analysis
