Variance Analysis Flashcards
(36 cards)
Variance
- difference between a planned, budgeted or standard cost/revenue
- with actual cost incurred
- analysed with variance analysis
Favourable Variance
When actual results better than expected results
Adverse Variance
actual results worse than expected results
What are the three main groups of variances?
- variable costs
- fixed production overheads
- sales
Differences in quantities known as
- efficiency
-usage - volume
Differences in expenditure known as
- rate
-price - expenditure
Total Material Variance
Actual number of units should’ve cost
(actual number units did cost)
- in terms of materials, based on actual production
Material Price Variance
- based on actual purchases
Actual qty purchased should’ve cost
(actual qty purchased did cost)
Material Usage Variance
- based on actual production
Actual production should use
(actual production did use)
difference in kg/l/m x Standard cost per kg/l/m
Total Labour Variance
- based on actual production
actual units x labour hours budgeted x budgeted cost per labour hour
(actual labour used cost)
Labour Rate Variance
- based on hours paid
Actual hours paid x what should’ve cost
(actual hours paid did cost)
Labour Efficiency Variance
- based on actual production
actual production should take (hrs)
(actual production did take (hrs))
difference x standard labour rate/ hour
Idle time variance
- difference between hours paid and worked
Hours paid
(hours worked)
difference x standard labour rate/ hour
Variable Production Overhead total variance
- based on actual production & labour hrs
actual production x budgeted labour hrs per unit x budgeted variable O/H cost / hr
(actual hrs worked x actual variable overhead cost/ hr)
Variable Production Overhead expenditure Variance
- based on actual hrs worked
actual hrs worked x standard variable O/H cost/ hr
(actual hrs worked x actual variable O/H cost / hr)
Variable Production Overhead efficiency Variance
- based on actual production
actual production should’ve taken (hrs)
(actual production did take (hrs) only active hrs not idle)
difference x standard variable overhead rate/ hr
Total fixed Overhead Variance
fixed O/Hs absorbed- actual production x OAR/ unit
(actual fixed overheads incurred)
Fixed overhead expenditure Variance
- Marginal & Absorption costing
Budgeted fixed O/Hs
(actual fixed O/Hs)
Fixed Overhead volume variance
budgeted production x budgeted OAR/ unit
(actual production x budgeted OAR/ unit)
Fixed Overhead Volume efficiency variance
actual production x standard labour hrs/ unit
(actual labour hrs)
difference x standard OAR per labour hr
Fixed overhead volume capacity variance
budgeted labour hrs
(actual labour hrs)
difference x standard OAR/ labour hr
Fixed Overhead volume variance =
= efficiency variance + capacity variance
Sales price Variance
- based on number of units sold
actual sales x standard sales price/ unit
(actual sales x actual sales price/unit)
Sales volume variance
budgeted sales volume
(actual sales volume)
difference x standard profit/ unit (AC)
difference x standard contribution/ unit (MC)
