standard costing

You do not have to remember all the formula of variances as they are all based on logic. Still I am posting the list to better understand them.

Sales variances

Sales price variance:
Change in budgeted and actual selling price (per unit) x actual sales
Budgeted selling price greater actual selling price = A
Budgeted selling price lesser actual selling price = F

Sales volume variance:
Change in budgeted and actual sales x budgeted profit/contribution
Budgeted sales greater actual sales = A
Budgeted sales lesser actual sales = F

Materials cost variances

Materials price variance:
Change in budgeted and actual cost (per kg, etc.) x purchased material (quantity)
Budgeted cost (per unit) greater actual cost = F
Budgeted cost lesser actual cost = A

Materials usage variance:
Change in standard and actual materials usage x budgeted cost (per kg, etc.)
Standard materials usage greater actual materials usage = F
Standard materials usage lesser actual materials usage = A

Total materials variance
Materials price variance + materials usage variance
or
Standard materials cost – actual materials cost
Standard materials cost greater actual materials cost = F
Standard materials cost lesser actual materials cost = A

Labour cost variances

Labour rate/price variance:
Change in budgeted and actual cost (per hour) x actual hours
Budgeted cost (per hour) greater actual cost = F
Budgeted cost (per hour) lesser actual cost = A

Labour efficiency variance:
Change in standard and actual hours x budgeted cost (per hour)
Standard hours greater actual hours = F
Standard hours lesser actual hours = A

Labour total variance:
Labour rate/price variance + Labour efficiency variance
or
Standard labour cost (of actual production) – actual labour cost
Standard labour cost greater actual labour cost = F
Standard labour cost lesser actual labour cost = A

Variable overhead variances

Variable overhead expenditure variance
Change in standard and actual cost (per hour) x actual hours
Standard cost (per hour) greater actual cost = F
Standard cost (per hour) lesser actual cost = A

Variable overhead efficiency variance:
Change in standard and actual hours x budgeted cost (per hour)
Standard hours greater actual hours = F
Standard hours lesser actual hours = A

Variable overhead total variance:
Variable overhead expenditure variance + Variable overhead efficiency variance
or
Standard variable overhead (of production) – actual variable overhead
Standard variable overhead greater actual variable overhead = F
Standard variable overhead lesser actual variable overhead = A

If interested, I will also share fixed overhead variances.

Best wishes,
Tammi