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Materials quantity variance |
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Definition of Materials quantity varianceMaterials quantity varianceThe difference between the actual and budgeted quantities
Related Terms:Bill of materialsA listing of all the materials and quantities that go to make up a completed product. bill of materialsa document that contains information about Bill of materialsAn itemization of the parts and subassemblies required to create a Bill of materials (BOM)A listing of all parts and subassemblies required to produce one Breeder bill of materialsA bill of material that accounts for the generation and budget variancethe difference between total actual overhead controllable variancethe budget variance of the two variance approach to analyzing overhead variances CovarianceA statistical measure of the degree to which random variables move together. CovarianceA measure of the degree to which returns on two assets move in Direct materials costThe cost of all materials used in a cost object, such as finished goods. Direct materials mix varianceThe variance between the budgeted and actual mixes of economic order quantityOrder size that minimizes total inventory costs. Economic order quantity (EOQ)The order quantity that minimizes total inventory costs. economic order quantity (EOQ)an estimate of the number fixed overhead spending variancethe difference between the total actual fixed overhead and budgeted fixed overhead; fixed overhead volume variancesee volume variance labor efficiency variancethe number of hours actually worked minus the standard hours allowed for the production Labor efficiency varianceThe difference between the amount of time that was budgeted labor mix variance(actual mix X actual hours X standard rate) - (standard mix X actual hours X standard rate); labor rate variancethe actual rate (or actual weighted average rate) paid to labor for the period minus the standard rate multiplied by all hours actually worked during the period; Labor rate varianceThe difference between the actual and standard direct labor rates labor yield variance(standard mix X actual hours X standard rate) - (standard mix X standard hours X standard rate); material mix variance(actual mix X actual quantity X standard price) - (standard mix X actual quantity X standardprice); material price variancetotal actual cost of material purchased material quantity variance(actual quantity X standard price) - (standard quantity allowed standard price); material yield variance(standard mix X actual quantity X standard price) - (standard mix X standard quantity X standard price); Materials price varianceThe difference between the actual and budgeted cost to Materials requirement planningComputer-based systems that plan backward from the production schedule materials requirements planning (MRP)a computerbased information system that simulates the ordering and Materials requisitionA document listing the quantities of specific parts to be withdrawn Mean-variance analysisEvaluation of risky prospects based on the expected value and variance of possible outcomes. Mean-variance criterionThe selection of portfolios based on the means and variances of their returns. The Mean-variance efficient portfolioRelated: Markowitz efficient portfolio Minimum-variance frontierGraph of the lowest possible portfolio variance that is attainable for a given Minimum-variance portfolioThe portfolio of risky assets with lowest variance. noncontrollable variancethe fixed overhead volume variance; overhead efficiency variancethe difference between total budgeted overhead at actual hours and total budgeted overhead spending variancethe difference between total actual overhead and total budgeted overhead at actual Portfolio varianceWeighted sum of the covariance and variances of the assets in a portfolio. Production yield varianceThe difference between the actual and budgeted proportions Quantity AdjusterA firm that reacts to excess supply or excess demand by adjusting quantity rather than price. Contrast with price adjuster. Quantity Theory of MoneyTheory that velocity is constant, and so a change in money supply will change nominal income by the same percentage. Formalized by the equation Mv = PQ. Raw materialsUnprocessed goods bought for manufacture, part of inventory. Raw materials inventoryThe total cost of all component parts currently in stock that Selling price varianceThe difference between the actual and budgeted selling price for Serial covarianceThe covariance between a variable and the lagged value of the variable; the same as standard quantity allowedthe quantity of input (in hours or some other cost driver measurement) required at standard for the output actually achieved for the period Summarized bill of materialsA bill of materials format showing the grand total total overhead variancethe difference between total actual overhead and total applied overhead; it is the amount of underapplied or overapplied overhead total variancethe difference between total actual cost incurred variable overhead efficiency variancethe difference between budgeted variable overhead based on actual input activity and variable overhead applied to production variable overhead spending variancethe difference between total actual variable overhead and the budgeted amount of variable overhead based on actual input activity VarianceA measure of dispersion of a set of data points around their mean value. The mathematical VarianceThe weighted average of the squared deviations from the variancea difference between an actual and a standard or VarianceThe dispersion of a variable. The square of the standard deviation. varianceAverage value of squared deviations from mean. A measure of volatility. Variance analysisA method of budgetary control that compares actual performance against plan, investigates the causes of the variance and takes corrective action to ensure that targets are achieved. variance analysisthe process of categorizing the nature (favorable or unfavorable) of the differences between standard and actual costs and determining the reasons for those differences Variance minimization approach to trackingAn approach to bond indexing that uses historical data to Variance ruleSpecifies the permitted minimum or maximum quantity of securities that can be delivered to volume variancea fixed overhead variance that represents
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