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sir,I have question regarding favorable & adverse conclusion.How can we came to conclusion that its favorable or adverse
Try to use logic:
If the original standard cost of material was $5/kg and the revised standard is $6/kg then that is an unfavourable price planning variance. The original budget understated costs. So, if the actual cost of material is $9/kg the total adverse material price variance would be based on the difference between the original standard cost per kg($5) and the actual cost per kg ($9). This becomes an adverse planning variance based on 6-5 and an operational adverse price variance based on 9-6.
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