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Home Standard Costing and Variance Analysis Standard Costing and Variance Analysis Formulas
 
 

Standard Costing and Variance Analysis Formulas:

This is a collection of variance formulas/equations which can help you calculate variances for direct materials, direct labor, and factory overhead.

  1. Direct materials variances formulas
  2. Direct labor variances formulas
  3. Factory overhead variances formulas

Direct Materials Variances:

Materials purchase price variance Formula:
Materials purchase price variance = (Actual quantity purchased Actual price) (Actual quantity purchased Standard price)

Materials price usage variance formula:
Materials price usage variance = (Actual quantity used Actual price) (Actual quantity used Standard price)

materials quantity/usage variance formula:
Materials price usage variance = (Actual quantity used Standard price) (Standard quantity allowed Standard price)

Materials mix variance formula:
(Actual quantities at individual standard materials costs)   (Actual quantities at weighted average of standard materials costs)

Materials yield variance formula:
(Actual quantities at weighted average of standard materials costs)   (Actual output quantity at standard materials cost)

Direct Labor Variances:

Direct labor rate/price variance formula:
(Actual hours worked Actual rate) (Actual hours worked Standard rate)

Direct labor efficiency/usage/quantity formula:
(Actual hours worked Standard rate) (Standard hours allowed Standard rate)

Direct labor yield variance formula:
(Standard hours allowed for expected output Standard labor rate) (Standard hours allowed for actual output Standard labor rate)

Factory Overhead Variances:

Factory overhead controllable variance formula:
(
Actual factory overhead) (Budgeted allowance based on standard hours allowed
*)

Factory overhead volume variance:
(Budgeted allowance based on standard hours allowed*) (Factory overhead applied or charged to production**)

Factory overhead spending variance:
(Actual factory overhead) (Budgeted allowance based on actual hours worked***)

Factory overhead idle capacity variance formula:
(Budgeted allowance based on actual hours worked***) (Actual hours worked Standard overhead rate)

Factory overhead efficiency variance formula:
(Actual hours worked Standard overhead rate) (Standard hours allowed for expected output Standard overhead rate)

Variable overhead efficiency variance formula:
(Actual hours worked Standard variable overhead rate) (Standard hours allowed Standard variable overhead rate)

Variable overhead efficiency variance formula:
(Actual hours worked Fixed overhead rate) (Standard hours allowed Fixed overhead rate)

Factory overhead yield variance formula:
(Standard hours allowed for expected output Standard overhead rate) (Standard hours allowed for actual output Standard overhead rate)


*Fixed overhead budgeted + Standard hours allowed Standard variable overhead rate

**Standard hours allowed for actual production Standard overhead rate

***Fixed overhead budgeted + Actual hours worked Standard variable overhead rate

Relevant Articles:

Definition and Explanation of Standard Cost
Purposes and Advantages of Standard Costing System
Setting Standards
Materials Price Standard
Materials Price Variance
Materials Quantity Standard
Materials Quantity Variance
Direct Labor Rate Standard
Direct Labor Rate Variance
Direct Labor Efficiency Standard
Direct Labor Efficiency Variance
Factory Overhead Cost Standards
Overall or Net Factory Overhead Variance
Overhead Controllable Variance
Overhead Volume Variance
Overhead Spending Variance
Overhead Idle Capacity Variance
Overhead Efficiency Variance
Variable Overhead Efficiency Variance

Fixed Overhead Efficiency Variance

Mix and Yield Variance
Variance Analysis Example
Standard Costing and Variance Analysis Formulas
Management by Exception and Variance Analysis
International Uses of Standard Costing System
Advantages, Disadvantages, and Limitations of Standard Costing

 

 

A D V E R T I S E M E N T

 

Financial Accounting Topics


  Introduction to Accounting
 ----------------------------------------------------------------------------
  Transactions and Accounting Equation
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  Analysis of Business Transactions
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  Journal, Ledger and Trial Balance
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  Accounting for Bills of Exchange
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  Special Journals
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  Cash Book
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Bank Reconciliation Statement
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  Final Accounts
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  Work Sheet
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  Capital and Revenue Items
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  Valuation of Inventories
----------------------------------------------------------------------------
  Accounts of Non-profit Making Organizations
----------------------------------------------------------------------------
  Statement of Cash Flows
----------------------------------------------------------------------------
  Accounting Ratios Analysis
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  Depreciation, Provisions and Reserves
----------------------------------------------------------------------------
  Accounting Dictionary
----------------------------------------------------------------------------
  Financial Calculators
 
 
 
Managerial Accounting Topics

  Financial Statements
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  Cost Volume Profit Relationship
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  Variable Costing System
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  Materials and Inventory Cost Control
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  Activity Based Costing System
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  Standard Costing and Variance Analysis
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  Balanced Scorecard
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  Capital Investment Analysis/Capital Budgeting
 

 

 

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