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.
 Direct materials variances formulas
 Direct labor variances formulas
 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
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