# Planning variances

This topic contains 2 replies, has 3 voices, and was last updated by  shaharyar 3 years ago. This post has been viewed 18 times

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• #46888

karenlaing
Member

Q1 Dec 2009 exam – I am confused, the price planning variance involves the revised usage x rev cost – rev usage x std cost.
However, the Planning usage variance uses the Rev Usage x Std price v Std Usage by Std Price.
Why if the price variance uses revised usage does the Usage variance does not use revised price?

#74431

John Moffat
Keymaster

The price variance is looking only at the effect of the cost changing, so it takes the revised usage and compares revised cost with standard cost.

The usage variance is only looking at the effect of the usage changing, so it looks what effect it could have if the usage changed, but the cost remained the same.

#74432

shaharyar
Participant

Do our question is wrong if our total planning variance is same but indiviual variance is different?

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