Variance Analysis Tcm4-118188

NATIONAL QUALIFICATIONS CURRICULUM SUPPORT
Accounting and
Finance
Variance Analysis
[AVANC! "I#"!R$
Acknowledgements
T%is docu&ent is 'roduced (y Learning and Teac%ing Scotland as 'art o) t%e National
Quali)ications su''ort 'rogra&&e )or Accounting and Finance*
First 'u(lis%ed +,,-
!lectronic .ersion +,,-
/ Learning and Teac%ing Scotland +,,-
T%is 'u(lication &ay (e re'roduced in 0%ole or in 'art )or educational 'ur'oses (y
educational esta(lis%&ents in Scotland 'ro.ided t%at no 'ro)it accrues at any stage*
CONTENTS
Section 1: Standard costing 1
Reasons )or standard costing and .ariance analysis
Ty'es o) standard 2e3'ected4 current4 (asic4 ideal5
Pro(le&s o) setting u' a standard cost syste&
Ad.antages o) setting u' standard cost syste&
Section 2: Cost variances 6
Materials 7 cost4 'rice4 usage
La(our 7 cost4 rate4 e))iciency
Varia(le o.er%eads 7 cost4 e3'enditure4 e))iciency
Reasons )or .ariances
Section 3: Standard costs and budgeted costs 11
Varia(le o.er%eads 7 cost4 e3'enditure4 e))iciency
Fi3ed o.er%eads 7 cost4 e3'enditure4 e))iciency4 .olu&e4
ca'acity
Section 4: Revenue variances 18
Sales 7 re.enue4 'rice4 .olu&e
Section 5: Formulae +1
T%e use o) )or&ulae )or calculating .ariances
Section 6: !ercises +9
Section ": Solutions -9
ACCOUNTIN# AN FINANC! 7 VARIANC! ANAL:SIS 2 A"5 ###
/ Lear ni ng and Teac%i ng Scot l and +,,-
#$ ACCOUNTIN# AN FINANC! 7 VARIANC! ANAL:SIS 2 A"5
S%A&'AR' C(S%#&)
SECTION 1
Reasons *or standard costing and variance anal+sis
"istoric costing is used in )inancial accounting and state&ents tend to (e
'resented at t%e end o) t%e year4 t%ere)ore
correcti.e action is i&'ossi(le
t%ere is no yardstic; (y 0%ic% 'er)or&ance can (e co&'ared*
T%is s%ortco&ing o) )inancial accounting %as led to t%e use o) standard
costing and .ariance analysis*
Standard costing and .ariance analysis &a;e u' a 'redeter&ined costing
syste& 0%ere
actual 'er)or&ance is co&'ared 0it% a 'redeter&ined 'er)or&ance so t%at
i) di))erences occur &anage&ent can ta;e action<
standard costing co&'ares actual 'roduction and sales 0it% 'lanned
'roduction and sales<
0%en standards )or costing are in o'eration t%ey are not altered 7 unless a
)le3i(le (udget is used<
costs are 're'ared to s%o0 t%e standard cost< actual cost and any
.ariances4 i*e* t%e di))erence (et0een t%e standard or (udgeted cost and t%e
actual cost*
Advantages of standard costing and variance analysis
Pro.ide a yardstic;*
"el' deter&ine t%e 'rice o) a 'roduct*
Variances can (e analysed in detail*
Costing is si&'li)ied*
Manage&ent is encouraged to 'lan a%ead*
ACCOUNTIN# AN FINANC! 7 VARIANC! ANAL:SIS 2 A"5 1
S%A&'AR' C(S%#&)
%+,es o* standard
T%e &ain standards are
e!,ected standard 7 t%is &erges t%e )eatures o) )orecasting 0it% standard
setting* !3'ected standards usually ta;e so&e account o) delays and
ine))iciencies* T%ey s%ould4 %o0e.er4 (e regularly re.ie0ed as conditions
c%ange* T%is sets realistic standards t%at (ot% 0or;)orce and &anage&ent
0ill try to reac%*
current standard 7 )or organisations 0%ic% are )aced 0it% ra'idly c%anging
&ar;et conditions* Again4 suc% standards ta;e account o) ine))iciencies*
T%ey s%ould4 %o0e.er4 (e regularly re.ie0ed as conditions c%ange*
basic standard 7 %ere standards are le)t unc%anged o.er long 'eriods o)
ti&e* It does not ta;e account o) c%anges in current &et%ods o) 'roduction4
'rices or ot%er c%anging )actors* Since )re=uent c%anges are necessary4 (asic
standards are rarely used e3ce't as a (asis )or 're'aring current standards*
ideal standard 7 t%is is t%e standard 0%ic% can (e attained under t%e &ost
)a.oura(le conditions 'ossi(le* It ignores &ac%ine (rea;do0n and )aulty
&aterials4 in )act4 any 0aste 0%atsoe.er* T%is le.el o) 'er)or&ance is seldo&
reac%ed and is li;ely to de&oralise sta))* Per)ection is i&'ossi(le and )or
t%is reason t%is standard is not reco&&ended*
T%e setting o) a standard cost in.ol.es e.ery de'art&ent and ai&s to 'roduce
a 'lanned cost related to t%e 'roduct su''lied (y t%e organisation* T%e
detailed 'lanning t%at goes into 'roducing a standard cost s%ould &a;e it
'ossi(le to co&'are current actual results 0it% t%e detailed cost 'lan* T%e
're'aration o) t%e standard costs is ty'ically (ased on eit%er t%e e3'ected
standard or t%e current standard since t%ese t0o &et%ods &ore closely re)lect
0%at is %a''ening 0it%in an organisation*
-roblems o* setting u, a standard cost s+stem
>%en 're'aring standard costs it is i&'ortant to consider at 0%at le.el o)
'roduction t%e (usiness is e3'ected to o'erate*
0%at 'ast 'er)or&ance suggests is ca'a(le o) attain&ent 7 t%is tends to
lead to &anage&ent co&'lacency<
0%at 0ould necessitate &a3i&u& e))iciency 7 t%is tends to (e unrealistic
(ut .ariances could sti&ulate &anage&ent<
2 ACCOUNTIN# AN FINANC! 7 VARIANC! ANAL:SIS 2 A"5
S%A&'AR' C(S%#&)
0%at is 'ossi(le 0it% nor&al e))iciency*
Standards are set to ta;e account o)
&aterials 7 usage4 0aste4 'rice4 out'ut4 .olu&e
la(our 7 %ours4 rate o) 'ay4 stri;es4 out'ut4 o.erti&e
.aria(le o.er%eads 7 e3'ense o) 'o0er4 cleaners
)i3ed o.er%eads 7 e3'ense o) rent and rates
re.enue 7 'rices4 =uantity sold4 'ro)it*
T%e in)or&ation 0%ic% is used to set t%e standard is collected (y (ot%
&anage&ent and 0or; study 'ersonnel 0%o record t%e rele.ant in)or&ation
on a standard cost card* T%is is used )or e.ery acti.ity and it is to t%is t%at
&anage&ent 0ill constantly re)er to see i) t%e standard set is (eing ac%ie.ed*
T%e 'ro(le&s associated 0it% standard costing are?
No situation is static and in a c%anging situation t%e standard can (eco&e
unre'resentati.e* T%is incurs a cost o) constantly u'dating data*
T%e .alue o) &oney c%anges*
C%anges in ta3ation occur*
C%anges occur in 'roduction &et%ods4 &ac%inery4 la(our rates4
e))iciency4 stri;es*
Advantages o* setting u, a standard cost s+stem
T%ere are se.eral ad.antages to o'erating a standard cost syste&?
Variances direct &anage&ent@s attention to areas o) di))iculty*
T%e syste& assists in 'ricing t%e )inal 'roduct*
Standard costing is an e))ecti.e &et%od o) deter&ining t%e .alue o) costs*
Standard costing gi.es a constant )lo0 o) accounting in)or&ation to
&anage&ent 0it%out t%e need to constantly calculate costs*
T%e syste& assists in control (y identi)ying .ariances*
Standard costing is 'art o) t%e (udgetary 'rocedure*
S%A&'AR' C(S%#&)
T%e standard set on t%e standard cost card can (e used )or a considera(le
'eriod o) ti&e*
Only 0%en t%e .ariances (eco&e constantly )a.oura(le or ad.erse 0ill
standards need to (e c%anged* T%e standard4 0%en set4 0ill (e near t%e actual
cost (ut 0ill tend to &o.e as t%e cost o) &aterials4 la(our and o.er%eads
c%anges*
Fir&s 0%o o'erate (udgetary control %a.e a standard costing syste& and so
t%ey are a(le to in.estigate any di.ergence )ro& t%e set target* T%e
di))erences (et0een actual results and (udgeted e3'ectations are ;no0n as
.ariances*
C(S% $AR#A&CS
SECTION 2
Calculation o* variances using a diagram
Cost variances *or materials. labour and variable over/eads
Variances can (e e3'ressed in t0o 0ays4 eit%er (y diagra& or )or&ulae* T%e
use o) a diagra& )or &aterials4 la(our and .aria(le o.er%eads &a;es it
unnecessary to re&e&(er t%e )or&ulae since t%ey can (e calculated directly
)ro& t%e diagra&*
T%e di))erence (et0een t%e standard cost and t%e actual cost creates t%e
.ariances4 0%ic% can (e ad.erse 2a5 or )a.oura(le 2)5*
It is al0ays 'ossi(le to decide 0%et%er a .ariance is )a.oura(le or ad.erse b+
ins,ection since )a.oura(le .ariances are (elo0 t%e e3'ected cost 0%ile
ad.erse .ariances are %ig%er t%an t%e e3'ected cost*
>%en using t%e diagra& it is i&'ortant to ignore A or 7 in t%e calculation*
T%e 'riceBrateBe3'enditure .ariance and t%e usageBe))iciency .ariance 0%en
added toget%er e=ual t%e total cost .ariance*
T%e total cost variance )or &aterials4 la(our and .aria(le o.er%eads (rea;s
do0n into t0o 'arts*
%otal Cost $ariance Material Cost Variance
La(our Cost Variance
Varia(le O.er%ead Cost Variance
-rice $ariance Price )or Materials
La(our Rate )or La(our
!3'enditure )or Varia(le O.er%eads
0sage $ariance Usage )or Materials
!))iciency )or La(our
!))iciency )or Varia(le O.er%eads
T%e diagra& is constructed using (o3es* T%ese (o3es can (e used to
calculate all t%e .ariances )or &aterials4 la(our and .aria(le o.er%eads* T%e
a((re.iations used in t%e diagra& are as )ollo0s*
C(S% $AR#A&CS
AC C Actual Cost SC C Standard Cost
AP C Actual Price SP C Standard Price
AR C Actual Rate SR C Standard Rate
AQ C Actual Quantity SQ C Standard Quantity
A" C Actual "ours S" C Standard "ours
T%e )ollo0ing diagra& s%o0s all t%e .ariances*
Reasons *or variances
Variances arise )or &any reasons and can (e )a.oura(le 2s%o0ing t%at actual
'er)or&ance 0as (etter t%an 0as (udgeted5 or ad.erse 2s%o0ing t%at actual
'er)or&ance 0as 0orse t%an 0as (udgeted5* >%en .ariances are )a.oura(le4
&anage&ent is o'erating e))iciently< 0%en ad.erse4 &anage&ent &ust
in.estigate to )ind out 0%y 'er)or&ance is (elo0 t%at e3'ected*
1aterials
-rice variances are caused (y
c%ange in 'rice o) &aterials
c%ange in deli.ery costs and dates
'oor =uality &aterial (eing 'urc%ased
loss o) discount*
-ri ce $ari ance
2abour Rate $ari ance
!,endi ture $ari ance
A34S- 5 A-6
0sage $ari ance
**i ci enc+ $ari ance
S-4S3 5 A36
Standard Cost
4S- S36
A-7 AR
S-7 SR
S37 S8 A37 A8
Actual Cost 4A- A36
C(S% $AR#A&CS
0sage variances are caused (y
carelessnessB(ad %andling in use
e3cessi.e scra' or 0aste
'il)erageBusing nonDstandard &aterials
i ncorrect (oo;D;ee'i ng*
2abour
2abour rate variances are caused (y
c%ange in (asic 0age rates
'oor grade o) e&'loyee used on t%e Eo(
e3cessi.e use o) o.erti&e*
**icienc+ variances are caused (y
inco&'etent o'erati.esB'oor training
'oor su'er.isionBine))icient organisation
'oor 0or;ing conditions
delays due to &ac%ine (rea;do0nBlate deli.eries
stri;esBgoDslo0s*
$ariable over/eads
!,enditure variances are caused (y
c%ange in rent and rates
increases in ad&inistrati.e e3'enses
c%ange in )inancial e3'enses 7 interest rates
c%anges in t%e ca'ital (ase o) t%e )ir&*
**icienc+ variances are caused (y
use o) %eat and lig%t
a''ro'riate use o) s'ace
.olu&e o) 'roduction4 sto''ages4 stri;es*
ACCOUNTIN# AN FINANC! 7 VARIANC! ANAL:SIS 2 A"5 "
C(S% $AR#A&CS
!am,le 1
Fro& t%e )ollo0ing in)or&ation calculate t%e .ariances*
1aterials
Standard Price 'er &etre FG Actual Price 'er &etre F-
Standard Usage 2Quantity5 'er unit Actual Usage 2Quantity5 'er unit
6 &etres 9 &etres
Material Cost Variance C 2SC 7 AC5 C F+, 7 F+1 C F12a5
Material Price Variance C AQ2SP 7 AP5 C 9 F1 C F92)5
Material Usage Variance C SP2SQ 7 AQ5 C FG + C FH2a5
T%e .alues gi.en in t%e =uestion can (e 'laced on t%e diagra& and t%e
.ariances calculated*
-ri ce $ari ance
A34S- 5 A-6 :1 " :"4*6
0sage $ari ance
S-4S3 5 A36
2 :4 ; :94a6
Standard Cost
:4 5 ; :2<
A- :3
S- :4
S37 S8 A3 "m
Actual Cost :3 " ; :21
C(S% $AR#A&CS
!am,le 2
Fro& t%e )ollo0ing in)or&ation calculate t%e .ariances*
2abour
Standard Cost 'er unit Actual Cost o) 1,4,,, units
La(our - %ours I F1*G, 'er %our La(our +94,,, %ours costing F-,4,,,
La(our Cost Variance C 2SC 7 AC5 C [2- 1,4,,,5 F1*G,$ 7 F-,4,,, C F1+4,,,2)5
La(our Rate Variance C 2SR A"5 7 AC C F-94H,, 7 F-,4,,, C F94H,,2)5
La(our !))iciency Variance C SR2S" 7 A"5 C F1*G2-,4,,, 7 +94,,,5 C FG4+,,2)5
T%is e3a&'le does not 'ro.ide t%e actual 0age rate* "o0e.er4 t%e use o) t%e
diagra& 'ro.ides t%e calculation Standard Rate Actual "ours4 t%e total o)
t%e Standard Cost (o3 and t%e La(our !))iciency Variance (o3* T%us t%e (o3
syste& 'ro.ides a )or&ula t%at can (e used to calculate t%e La(our Rate
Variance*
T%e .alues gi.en in t%e =uestion can (e 'laced on t%e diagra& and t%e
.ariances calculated*
ACCOUNTIN# AN FINANC! 7 VARIANC! ANAL:SIS 2 A"5 =
2abour Rate $ari ance
:". 9<<4*6
SR4S8 5 A86 ;
:1> 4< 3. <<< ; :4. 2<<4*6
Standard Cost
:42. <<<
SR :1> 4<
S8 3<. <<< A8 2". <<<
Actual Cost :3<. <<<
1< ACCOUNTIN# AN FINANC! 7 VARIANC! ANAL:SIS 2 A"5
S%A&'AR' C(S%S A&' ?0')%' C(S%S
SECTION 3
Standard costs and budgeted costs
Jecause standard costing is used )or (ot% controlling costs and 're'aring
(udgeted )inal accounts4 it is i&'ortant to include all o.er%eads so t%at all
costs are 'lanned )or* T%is re=uires t%e )ollo0ing to (e ta;en into account*
(ver/ead absor,tion rates
O.er%eads are usually a(sor(ed on t%e (asis o) t%e (udgeted la(our %ours and
so it is necessary to calculate (ot% t%e Varia(le O.er%ead A(sor'tion Rate
and t%e Fi3ed O.er%ead A(sor'tion Rate so t%at all o.er%ead costs are
c%arged to t%e cost unit* T%e )or&ula is
Varia(le O" A(sor'tion Rate 2VOAR5 C Varia(le Judgeted O"BJudgeted
"ours
Fi3ed O" A(sor'tion Rate 2FOAR5 C Fi3ed Judgeted O"BJudgeted
"ours
Standard /ours ,roduction
Production is usually e3'ressed in ter&s o) units or Fs* "o0e.er4 0%en
standard costing tec%ni=ues are used4 'roduction can (e e3'ressed in ter&s
co&&on to all ty'es o) 'roduction 7 standard %our* T%is is t%e =uantity o)
out'ut or a&ount o) 0or; 0%ic% s%ould (e 'roduced in one %our* T%is is
'articularly use)ul 0%en e3a&ining o.er%eads (ecause t%e standard %ours
'roduction can (e co&'ared 0it% t%e actual %ours 'roduction*
Standard "ours Production 2S"P5 C Standard "ours Actual Production
$ariable over/ead variances
Unli;e )i3ed o.er%eads t%ere are t0o 0ays in 0%ic% .aria(le o.er%ead
.ariances can (e calculated* T%e &et%od used de'ends on t%e in)or&ation
gi.en in t%e =uestion* In (ot% cases t%e .ariances are t%e sa&e*
Varia(le O.er%ead Cost Variance
Varia(le O.er%ead !3'enditure Variance
Varia(le O.er%ead !))iciency Variance
S%A&'AR' C(S%S A&' ?0')%' C(S%S
1et/od 1
I) t%e in)or&ation 'resented in t%e =uestion gi.es only actual and standard
in)or&ation4 t%e .aria(le o.er%ead .ariances are calculated in t%e sa&e 0ay
as in &aterial and la(our .ariances*
Exampl e
1+4,,, units are 'roduced and result in Actual Varia(le O.er%eads o) F+,4,,,
)or 1,4,,, %ours 0or;ed* T%e Standard Varia(le O.er%eads e3'ected 0ere F1
)or eac% %our 0or;ed* Calculate t%e Varia(le O.er%ead .ariances*
Answer
Varia(le O.er%ead Cost Variance C SC 7 AC C F1+4,,, 7 F+,4,,, C FH4,,, 2a5
Varia(le O.er%ead !3'enditure Variance C A"2SR 7 AR5 C F1,4,,, 2a5
Varia(le O.er%ead !))iciency Variance C SR2S" 7 A"5 C F+4,,, 2)5
A84SR 5 AR6 ; :1<. <<<4a6
SR4S8 5 A86 ;
:1> << 2. <<< ; :2. <<<4*6
Standard Cost
:12. <<<
SR :1> <<
S8 12. <<< A8 1<. <<<
Actual Cost :2<. <<<
S%A&'AR' C(S%S A&' ?0')%' C(S%S
1et/od 2
For )actory o.er%ead costs4 t%e .ariances are calculated )or t%e )actory as a
0%ole or )or eac% cost centre* >%en t%e o.er%ead costs are calculated )or t%e
)actory as a 0%ole4 t%e in)or&ation is gi.en as a (udget rat%er t%an as indi.idual
standard costs and t%is re=uires t%e calculation o) t%e O.er%ead A(sor'tion Rate
since no Standard Rate is a.aila(le* "o0e.er4 t%e (o3 &et%od can still (e used4
0it% &odest alterations4 to calculate t%e Varia(le O.er%ead Variances*
VOAR C Varia(le O.er%ead A(sor'tion Rate
S"P C Standard "ours Production
Exampl e
Fro& t%e )ollo0ing in)or&ation calculate all t%e Varia(le O.er%ead Variances*
?udgeted? Varia(le O.er%eads F946,, Actual? Varia(le O.er%eads F84,,,
Judgeted "ours K4,,, "ours 0or;ed 64,,,
Standard "ours 64G,,
Answer
Varia(le O.er%ead Cost Variance C SC 7 AC C FK496, 7 F84,,, C F+4+6, 2a5
Varia(le O.er%ead !3'enditure Variance C 2VOAR A"5 7 AC C F+496, 2a5
Varia(le O.er%ead !))iciency Variance C VOAR2S" 7 A"5 C F6,, 2)5
VOAR C
Judgeted O.er%eads F946,,
C
Judgeted "ours K4,,,
C F1*+6
Standard Cost C Standard "ours VOAR C 64G,, F1*+6 C FK496,
4$(AR A86 5 AC
SR4$(AR4S87 S8- 5 A86
Standard Cost
AR
SR7 $(AR
S87 S8- A8
Actual Cost
S%A&'AR' C(S%S A&' ?0')%' C(S%S
In t%is ty'e o) =uestion t%e Standard Rate (eco&es t%e Varia(le O.er%ead
A(sor'tion Rate* It is i&'ortant to c%ec; t%at t%e correct (o3 layout is used
0%en t%e in)or&ation 'ro.ided is o) a (udgeted nature*
Fi!ed over/ead variances
Unli;e any ot%er cost ele&ent4 )i3ed o.er%eads are dealt 0it% in a se'arate
0ay since t%ese are al0ays (udgeted )or* Fi3ed o.er%eads can (e (ro;en
do0n into &ore t%an t%ree .ariances and include?
Fi!ed (ver/ead Cost $ariance 7 t%e total .ariance
Fi!ed (ver/ead !,enditure $ariance 7 occurs 0%en t%e cost o)
o.er%eads is di))erent )ro& t%at allo0ed )or
Fi!ed (ver/ead $olume $ariance 7 occurs 0%en t%e .olu&e o)
'roduction di))ers )ro& t%at allo0ed )or* T%is .ariance can (e su(di.ided
into?
5 Fi!ed (ver/ead **icienc+ $ariance 7 t%is arises due to la(our
(eing used &ore or less e))iciently t%an 'lanned
5 Fi!ed (ver/ead Ca,acit+ $ariance 7 t%is arises 0%en t%e %ours
0or;ed are &ore or less t%an 'lanned*
A84$(AR 5 AR6 ; :2. "5<4a6
$(AR4S8 5 A86
; :5<<4*6
Standard Cost
:6. "5<
AR :1> 9<
$(AR :1> 25
S8 5. 4<< A8 5. <<<
Actual Cost :=. <<<
S%A&'AR' C(S%S A&' ?0')%' C(S%S
Li;e t%e ot%er costs4 )i3ed o.er%eads can (e dis'layed using a (o3 layout*
T%e &ain di))erence is t%e use o) Judgeted "ours 2J"5 0%ic% re'resents t%e
o.erall total %ours set )or t%e 0or; to (e co&'leted*
T%us t%e Fi3ed O.er%ead Variances are?
Fi3ed O.er%ead Cost Variance 2Jo3 1 7 Jo3 -5 C SC 7 AC
Fi3ed O.er%ead Volu&e Variance 2Jo3 1 7 Jo3 +5 C SC 7 2FOAR J"5
Fi3ed O.er%ead !3'enditure Variance 2Jo3 + 7 Jo3 -5 C 2FOAR J"5 7 AC
FOAR C Fi3ed O.er%ead A(sor'tion Rate C
Fi3ed O.er%eads
Judgeted "ours
S" can also (e S"P and SR can (e FOAR*
Exampl e
Calculate all t%e Fi3ed O.er%ead Variances )or t%e )ollo0ing?
?udgeted Fi3ed O.er%eads FG4H,, Actual Fi3ed O.er%eads F64,,,
"ours K4,,, "ours 64,,,
Standard "ours 64G,,
Answer
FOAR C
Judgeted Fi3ed O.er%eads FG4H,,
C
Judgeted "ours K4,,,
C F,*H,
Fi3ed O.er%ead Cost Variance C SC 7 AC C FG4-+, 7 F64,,, C FKH,2a5
Fi3ed O.er%ead Volu&e Variance C SC 7 2FOAR J"5 C FGH,2a5
Fi3ed O.er%ead !3'enditure Variance C 2FOAR J"5 7 AC C F+,,2a5
$ol ume $ari ance Standard Cost
?o! 1
AR
SR7 F(AR
S87 S8- A8
Actual Cost
?o! 2
?8
S%A&'AR' C(S%S A&' ?0')%' C(S%S
T%e Standard Rate (eco&es t%e Fi3ed O.er%ead A(sor'tion Rate in t%is ty'e
o) =uestion*
T%e Fi3ed O.er%ead Volu&e Variance can (e su(Ddi.ided?
Fi3ed O.er%ead !))iciency Variance
Fi3ed O.er%ead Ca'acity Variance*
In order to calculate t%e last t0o Fi3ed O.er%ead .ariances4 Fi3ed O.er%ead
!))iciency and Fi3ed O.er%ead Ca'acity4 alterations are re=uired to t%e
diagra&*
4F(AR 5 ?86 5 AC ; :2<<4a6
$ol ume $ari ance
SC 5 4F(AR ?86
; :49<4*6
Standard Cost
:4. 32<
F(AR :<> 9<
S8 5. 4<< A8 5. <<<
Actual Cost :5. <<<
?8 6. <<<
S%A&'AR' C(S%S A&' ?0')%' C(S%S
T%e Fi3ed O.er%ead Volu&e Variance is su(Ddi.ided?
Fi3ed O.er%ead !))iciency Variance C FOAR2S" 7 A"5 C F,*H264G,, 7
64,,,5 C F-+,2)5
Fi3ed O.er%ead Ca'acity Variance C FOAR2A" 7 J"5 C F,*H264,,, 7 K4,,,5
C FH,,2a5
Cost variance *ormulae
1aterial variance
Material Cost Variance C SC 7 AC
Material Price Variance C AQ2SP 7 AP5
Material Usage Variance C SP2SQ 7 AQ5
2abour variances
La(our Cost Variance C SC 7 AC
La(our >age Rate Variance C A"2SR 7 AR5
La(our !))iciency Variance C SR2S" 7 A"5
ACCOUNTIN# AN FINANC! 7 VARIANC! ANAL:SIS 2 A"5 1"
$ol ume
$ari ance
Standard
Cost
F(AR7 SR
S87 S8- A8
Actual Cost
Ca,aci t+
$ari ance
S%A&'AR' C(S%S A&' ?0')%' C(S%S
$ariable over/ead variances
Varia(le O.er%ead Cost Variance C SC 7 AC or 2S" VOAR5 7 AC
Varia(le O.er%ead !3'enditure Variance C A"2SR 7 AR5 or 2VOAR A"5 7 AC
Varia(le O.er%ead !))iciency Variance C SR2S" 7 A"5 or VOAR2S" 7 A"5
Fi!ed over/ead variances
Fi3ed O.er%ead Cost Variance C SC 7 AC
Fi3ed O.er%ead Volu&e Variance C SC 7 2FOAR J"5
Fi3ed O.er%ead !3'enditure Variance C 2FOAR J"5 7 AC
T%e Fi3ed O.er%ead Volu&e Variance can (e su(Ddi.ided into?
Fi3ed O.er%ead !))iciency Variance C FOAR2S" 7 A"5
Fi3ed O.er%ead Ca'acity Variance C FOAR2J" 7 A"5
[T%e )or&ulae used )or standard costing are not uni)or&* T%e te3t(oo;s
currently on t%e &ar;et 'ro.ide &ore t%an one set o) )or&ulae4 %o0e.er t%e
use o) t%e diagra&s 0ill al0ays 'ro.ide a correct solution to t%e =uestion set
as 0ill t%e )or&ulae list 'ro.ided (y SQA*$
R$&0 $AR#A&CS
SECTION
Revenue variances
C%anges in 'ro)it occur 0%en t%e (udgeted re.enue .aries )ro& t%e actual re.enue*
T%e Revenue $ariances are
Sales Price Variance C 2Actual Price 7 Judgeted Price5 Actual Quantity
Sales Volu&e Variance C 2Actual Quantity 7 Judgeted Quantity5
Judgeted Price
Total Sales Re.enue Variance C Actual Re.enue 7 Judgeted Re.enue
T%e sa&e (o3 layout t%at is used )or t%e cost .ariances can (e used )or t%e
re.enue .ariances 0%ere standard in)or&ation is re'laced 0it% (udgeted
in)or&ation*
T%e re.enue .ariances can (e ad.erse or )a.oura(le de'ending on 0%et%er t%e
e3'ected selling 'rice and .olu&e o) sales 0ere ac%ie.ed*
Re&e&(er t%at re.enue 0ill o'erate in t%e directly o''osite 0ay to costs*
I) t%e actual sales re.enue is less t%an t%at (udgeted )or4 t%e .ariance is
ad.erse and i) t%e actual sales re.enue is &ore t%an t%at (udgeted )or4 t%e
.ariance is )a.oura(le*
ACCOUNTIN# AN FINANC! 7 VARIANC! ANAL:SIS 2 A"5 1=
Sal es -ri ce $ari ance
Sal es $ol ume $ari ance
?udgeted
Revenue
?-
?3 A3
Actual Revenue
A-
S%A&'AR' C(S%S A&' ?0')%' C(S%S
Reasons *or variances
Sales ,rice variances are caused (y
c%ange in 'rice
c%ange in de&and
co&'etitors@ 'rices
'rices o) si&ilar 'roducts*
Sales volume variances are caused (y
'oor sales )orce
lo0 le.els o) 'roduction and stoc;
cancelled orders
%ig% sales returns*
Exampl e
T%e )ollo0ing in)or&ation is 'ro.ided (y t%e Sales Manager?
?udgeted Actual
Sales 2in units5 -,, -1,
Selling Price F+, F1H
Answer
Total Sales Re.enue Variance C AR 7 JR C F646H, 7 FK4,,, C FG+,2a5
Sales Price Variance C 2AP 7 JP5 AQ C 7F+ -1, C FK+,2a5
Sales Volu&e Variance C 2AQ 7 JQ5 JP C 1, F+, C F+,,2)5
Sal es -ri ce $ari ance :62<4a6
Sal es $ol ume $ari ance
:2<<4*6
?udgeted
Revenue
:6. <<<
:2<
?3 3<< A3 31<
Actual Revenue
:19
F(R102A
SECTION !
Calculation o* variances using *ormulae
Formulae
T%e calculation o) .ariances can (e underta;en using )or&ulae* T%e
disad.antages o) using )or&ulae are t%at?
di))erent te3t(oo;s gi.e di))erent )or&ulae<
t%e standard costing )or&ulae are .ery si&ilar and &ista;es can (e &ade*
T%e SQA 0ill 'ro.ide standard cost )or&ulae )or use 0it% t%e NAJs (ut 0ill
not 'ro.ide t%e& )or students in t%e !3ternal !3a&ination* To a.oid
con)usion (et0een t%e &any suggested )or&ulae4 t%e SQA %a.e 'ro.ided an
aut%orised list t%at students are e3'ected to use in t%eir e3a&inations*
1aterials
Material Price Variance C 2Standard Price 7 Actual Price5 Actual
Quantity
Material Usage Variance C 2Standard Quantity 7 Actual Quantity5
Standard Price
Total Material Cost Variance C 2Standard Quantity Standard Price5 7
2Actual Quantity Actual Price5
2abour
La(our Rate Variance C 2Standard Rate 7 Actual Rate5 Actual
"ours
La(our !))iciency Variance C 2Standard "ours 7 Actual "ours5
Standard Rate
Total La(our Cost Variance C 2Standard Rate Standard "ours5 7
2Actual Rate Actual "ours5
F(R102A
$ariable over/eads
Varia(le O.er%ead !3'enditure C 2Varia(le O.er%ead A(sor'tion Rate
Vari ance Actual "ours5 7 Actual Cost
Varia(le O.er%ead !))iciency C Varia(le O.er%ead A(sor'tion
Variance Rate 2Standard "ours 7 Actual "ours5
Varia(le O.er%ead Cost C 2Standard "ours Varia(le O.er%ead
Variance A(sor'tion Rate5 7 Actual Cost
Fi!ed over/eads
Fi3ed O.er%ead !3'enditure C 2Fi3ed O.er%ead A(sor'tion Rate
Variance Judgeted "ours5 7 Actual Cost o) Fi3ed
O.er%eads
Fi3ed O.er%ead Volu&e C Standard Cost o) Fi3ed O.er%eads 7
Variance 2Fi3ed O.er%ead A(sor'tion Rate
Judgeted "ours5
Fi3ed O.er%ead Cost C Standard Cost o) Fi3ed O.er%ead 7 Actual
Variance Cost o) Fi3ed O.er%ead
T%e Fi3ed O.er%ead Volu&e Variance su(Ddi.ides into?
Fi3ed O.er%ead !))iciency C Fi3ed O.er%ead A(sor'tion Rate
2Producti.ity5 Variance 2Standard "ours 7 Actual "ours5
Fi3ed O.er%ead Ca'acity C Fi3ed O.er%ead A(sor'tion Rate 2Actual
2Production5 Variance "ours 7 Judgeted "ours5
Revenue
Sales Price Variance C 2Actual Price 7 Judgeted Price5 Actual
Quantity
Sales Volu&e Variance C 2Actual Quantity 7 Judgeted Quantity5
Judgeted Price
Total Sales Re.enue Variance C Actual Re.enue 7 Judgeted Re.enue
F(R102A
T%e a''lication o) a )or&ula to calculate .ariances 0ill 'roduce t%e sa&e
result as t%e (o3 a''roac%*
T%e )or&ulae used in .ariance analysis can (e di.ided into t%ree?
t%e )or&ulae )or &aterials and la(our .ariances are .ery si&ilar<
t%e )or&ulae )or .aria(le and )i3ed o.er%ead .ariances re=uire t%e use o)
(udgeted in)or&ation and t%e calculation o) o.er%ead a(sor'tion rates<
t%e )or&ulae )or re.enue .ariances re=uire t%e use o) (udgeted
in)or&ation*
T%e )ollo0ing 0or;ed e3a&'les s%o0 %o0 all t%e .ariances can (e calculated
using t%e )or&ulae*
Example 1
T%e #reendy;e Manu)acturing Co&'any &anu)actures #litLi using t%e
)ollo0ing standard s'eci)ication*
Standard direct la(our? 84K,, %ours at F-*H, 'er %our
Standard direct &aterials? 94,,, &etres at FK 'er &etre
Actual a&ount o) &aterials used 0as 946,, &etres costing FG6496,*
Actual la(our %ours 0ere 846,, costing F-H4,,,*
Using t%e a(o.e in)or&ation calculate all t%e .ariances )or (ot% &aterials and
la(our*
Answer
Actual Price C
FG6496,
946,,
C FK*1,
Actual >age Rate C
F-H4,,,
846,,
C FG
Material Price Variance C
2SP 7 AP5 AQ C 2FK 7 FK*1,5 946,, C 27F,*15 946,, C F96,2a5
Material Usage Variance C
2SQ 7 AQ5 SP C 294,,, 7 946,,5 FK C 276,,5 FK C F-4,,,2a5
Total Material Cost Variance C
2SQ SP5 7 2AQ AP5 C294,,, FK5 7 2946,, FK*1,5 C FG+4,,, 7 FG6496,
C F-496,2a5
F(R102A
La(our Rate Variance C
2SR 7 AR5 A" C 2F-*H, 7 FG5 846,, C 27F,*+5 846,, C F148,,2a5
La(our !))iciency Variance C
2S" 7 A"5 SR C 284K,, 7 846,,5 F-*H, C 21,,5 F-*H, C F-H,2)5
Total La(our Cost Variance C
2SR S"5 7 2AR A"5 C 2F-*H, 84K,,5 7 2FG 846,,5 C F-K4GH, 7
F-H4,,, C F146+,2a5
MNote t%at a 275 sign indicates an ad.erse .ariance and a 2A5 sign indicates a
)a.oura(le .ariance*
Example 2
Nac;son Manu)acturer 'roduces 'lugs )or sale to a 0ide range o) retail
outlets* T%e in)or&ation t%at t%ey %a.e on t%eir o.er%ead costs are as
)ollo0s*
?udgeted? Varia(le O.er%eads FH4,,, Actual? Varia(le O.er%eads FH4K,,
Fi3ed O.er%eads F1,4,,, Fi3ed O.er%eads F846,,
Judget "ours 64,,, "ours 0or;ed G4,,,
Standard "oursBStandard
"ours Production G46,,
Calculate all t%e o.er%ead .ariances*
Answer
Calculations?
Varia(le O.er%ead A(sor'tion Rate C
Judgeted O.er%eads FH4,,,
C
Judgeted "ours 64,,,
C F1*K,
Fi3ed O.er%ead A(sor'tion Rate C
Judgeted O.er%eads F1,4,,,
C
Judgeted "ours 64,,,
C F+
Standard "ours Production C
2Standard "ours Actual Production5
Standard "ours
C G46,,
Standard Cost C FOAR Standard "ours C F+ G46,, C F84,,,
Standard Cost 7 VOAR Standard "ours C F1*K, G46,, C F94+,,
F(R102A
$ariable over/eads
Varia(le O.er%ead !3'enditure Variance C
2VOAR A"5 7 AC C 2F1*K, G4,,,5 7 FH4K,, C FK4G,, 7 FH4K,, 7 FK4G,,
C F+4+,,2a5
Varia(le O.er%ead !))iciency Variance C
VOAR2S" 7 A"5 C F1*K,2G46,, 7 G4,,,5 C FH,,2)5
Varia(le O.er%ead Cost Variance C
2S" VOAR5 7 AC C 2G46,, F1*K,5 7 FH4K,, C F94+,, 7 FH4K,, C
F14G,,2a5
Fi!ed over/eads
Fi3ed O.er%ead !3'enditure Variance C
2FOAR J"5 7 AC C 2F+ 1,4,,,5 7 846,, C F6,,2)5
Fi3ed O.er%ead Volu&e Variance C
SC 7 2FOAR J"5 C F84,,, 7 2F+ 64,,,5 C F84,,, 7 F1,4,,, C F14,,,2a5
Fi3ed O.er%ead Cost Variance C
SC 7 AC C F84,,, 7 F846,, C F6,,2a5
Fi3ed O.er%ead !))iciency 2Producti.ity5 Variance C
FOAR2S" 7 A"5 C F+ 2G46,, 7 G4,,,5 C F14,,,2)5
Fi3ed O.er%ead Ca'acity 2Production5 Variance C
FOAR2A" 7 J"5 C F+ 2G4,,, 7 64,,,5 C F+4,,,2a5
M Note t%at a 275 sign indicates an ad.erse .ariance and a 2A5 sign indicates a
)a.oura(le .ariance*
Example 3
T%e )ollo0ing in)or&ation is 'ro.ided (y t%e Production Manager o) PJ
Manu)acturing*
?udgeted Actual
Sales 2in units5 6,, GH,
Selling Price FH F1,
Calculate all t%e Re.enue Variances*
F(R102A
Answer
Sales Price Variance C
2AP 7 JP5 AQ C 2F1, 7 FH5 GH, C F8K,2)5
Sales Volu&e Variance C
2AQ 7 JQ5 JP C 2GH, 7 6,,5 FH C 27+,5 FH C F1K,2a5
Total Sales Re.enue Variance C
AR 7 JR C FG4H,, 7 FG4,,, C FH,,2)5
@RC#SS
SECTION "
3uestion 1
Calculate t%e &aterial .ariances )ro& t%e )ollo0ing data stating 0%et%er t%ey
are 'rice .ariances or usage .ariances 7 ad.erse or )a.oura(le*
1aterial 'etails
2a5 Standard 'rice 'er ;ilo FG,
Standard usage 'er unit 11 ;ilos
Actual 'rice 'er ;ilo FG,
Actual usage 'er unit 1- ;ilos
2(5 Standard 'rice 'er &etre F+6
Standard usage 'er unit K, &etres
Actual 'rice 'er unit F+H
Actual usage 'er unit K, &etres
2c5 Standard 'rice 'er ;ilo F-
Standard usage 'er unit 14,,, ;ilos
Actual 'rice 'er ;ilo F-
Actual usage 'er unit 89- ;ilos
2d5 Standard 'rice 'er gra& F19
Standard usage 'er unit GG, gra&s
Actual 'rice 'er gra& F1G
Actual usage 'er unit GG, gra&s
2e5 Standard 'rice 'er &etre FK
Standard usage 'er unit HH &etres
Actual 'rice 'er &etre FG
Actual usage 'er unit H6 &etres
2)5 Standard 'rice 'er ;ilo F119
Standard usage 'er unit -, ;ilos
Actual 'rice 'er ;ilo F1+-
Actual usage 'er unit +, ;ilos
2g5 Standard 'rice 'er litre F16
Standard usage 'er unit 16H litres
Actual 'rice 'er litre F1K
Actual usage 'er unit 1K6 litres
@RC#SS
3uestion 2
Calculate as &any .ariances as you can )ro& t%e )ollo0ing in)or&ation*
1* Standard cost 'er unit Actual cost o) 64,,, units 'roduced
Material 6 ;ilos I F,*K, 'er ;ilo Material +K46,, ;ilos costing F1-4,,,
La(our 1 %r I F1*1, 'er %r La(our G4H,, %rs costing F64,,,
+* Standard cost 'er unit Actual cost o) 946,, units 'roduced
Material - & I F+*6, 'er & Material +14,,, & costing F6,4,,,
La(our G %rs I F1*+, 'er %r La(our +H4,,, %rs costing F-,4,,,
-* Standard cost 'er unit Actual cost o) 1,4,,, units 'roduced
Material 6 ;ilos I F,*6, 'er ;ilo Material 6G4,,, ;ilos costing F+K4,,,
La(our + %rs I F+ 'er %r La(our 184,,, %rs costing F-,4,,,
Varia(le O.er%eads 1 %r I F1B%r Varia(le o.er%ead 1,4,,, %rs costing
F164,,,
G* Standard cost 'er unit Actual cost o) 14,,, units 'roduced
Material + & I F1*6, 'er & Material +4,,, & costing FG4,,,
La(our K %rs I F,*H 'er %r La(our 94,,, %rs costing F94,,,
6* Standard cost 'er unit Actual cost o) -4,,, units 'roduced
Material 1 g I F- 'er g Material G4,,, g costing F164,,,
La(our + %rs I F1*+, 'er %r La(our K4,,, %rs costing FH4,,,
@RC#SS
3uestion 3
Calculate t%e standard cost o) &aterials4 la(our and .aria(le o.er%eads )or
eac% o) t%e )ollo0ing 'roducts and related out'uts*
1* +4,,, units 0ere 'roduced o) 'roduct O 0%ere?
Actual costs? irect &aterials FH,,< irect la(our F-,,< Varia(le
o.er%eads F+,,
Favourable variances? Material usage F+,< O.er%ead .olu&e F6,
Adverse variances? Material 'rice FG,< La(our e))iciency F1,< La(our
rate F+,< O.er%ead e3'enditure F-,*
+* 14,,, units 0ere 'roduced o) 'roduct S 0%ere?
Actual cost? irect &aterials F14,,,< irect la(our FG,,< Varia(le
o.er%eads F+,,
Favourable variances? Material usage F1,< O.er%ead .olu&e FG,<
Material 'rice F1,
Adverse variances? La(our e))iciency F+,< La(our rate F-,< O.er%ead
e3'enditure F1,*
-* 64,,, units 0ere 'roduced o) 'roduct A 0%ere?
Actual costs? irect &aterials F8,,< irect la(our F+,,< Varia(le
o.er%eads F1,,
Favourable variances? Material usage F+,< O.er%ead .olu&e F+,<
Material 'rice F1,
Adverse variances? La(our e))iciency F+,< La(our rate F+,< O.er%ead
e3'enditure F1,
G* +4,,, units 0ere 'roduced o) 'roduct J 0%ere?
Actual costs? irect &aterial F-,,< irect la(our FK,,< Varia(le
o.er%eads F1,,
Favourable variances? Material usage F-,< O.er%ead .olu&e FG,
Adverse variances? Material 'rice F+,< La(our e))iciency F+,< La(our
rate F1,< O.er%ead e3'enditure F-,*
@RC#SS
3uestion 4
Calculate as &any .ariances as you can )ro& t%e )ollo0ing in)or&ation*
1* Standard Cost 'er unit Actual Cost o) 1,4,,, units 'roduced
Material G & I F,*6, 'er & Material 1K4,,, & costing
F1H4,,,
La(our - %rs I F1*G, 'er %r La(our +94,,, %rs costing FG,4,,,
+* Standard Cost 'er unit Actual Cost o) G4,,, units 'roduced
Material + ;ilos I FG*,, 'er ;ilo Material 1,4,,, ;ilos costing F+,4,,,
La(our K %rs I F1*,, 'er %r La(our G,4,,, %rs costing F-H4,,,
-* Standard Cost 'er unit Actual Cost o) +4,,, units 'roduced
Material + & I F+*6, 'er & Material K4,,, & costing F1+4,,,
La(our 1 %r I F1*,, 'er %r La(our 64,,, %rs costing FG4,,,
G* Standard Cost 'er unit Actual Cost o) 14,,, units 'roduced
Material 1 ;ilo I F1 'er ;ilo Material 14,,, ;ilos costing F14,,,
La(our + %rs I F+ 'er %r La(our +4,,, %rs costing FG4,,,
6* Standard Cost 'er unit Actual Cost o) 6,, units 'roduced
Material - ;ilos I F,*H, 'er ;ilo Material 14G,, ;ilos costing F14,,,
La(our 1 %r I F,*6, 'er %r La(our -6, %rs costing FG,,
Varia(le O.er%eads + %rs I F1B%r Varia(le O.er%eads H,, %rs costing
F146,,
K* Standard Cost 'er unit Actual Cost o) +4,,, units 'roduced
Material H ;ilos I F,*96 'er ;ilo Material 164,,, ;ilos costing F1G4,,,
La(our +, %rs I F,*-, 'er %r La(our 194,,, %rs costing F+,4,,,
Varia(le O.er%eads1 %r I F,*9,B%r Varia(le O.er%eads 64,,, %rs costing
F-4,,,
@RC#SS
3uestion 5
Calculate t%e standard cost o) &aterials4 la(our and .aria(le o.er%eads )or
eac% o) t%e )ollo0ing 'roducts and related out'uts*
1* G,, units 0ere 'roduced o) 'roduct S 0%ere?
Actual costs? irect &aterials FG,,< irect la(our F1,,< Varia(le
o.er%eads F1,,
Favourable variances? Material usage F6< O.er%ead .olu&e FK,
Adverse variances? Material 'rice FK,< La(our e))iciency F+,4 La(our
rate FH*
+* G46,, units 0ere 'roduced o) 'roduct A 0%ere?
Actual costs? irect &aterials F9,,< irect la(our F14,,,< Varia(le
o.er%eads F-,,
Favourable variances? Material 'rice FK,
Adverse variances? Material usage F-,< La(our e))iciency F1,< La(our
rate F6< O.er%ead .olu&e FG< O.er%ead e3'enditure FK*
-* H4,,, units 0ere 'roduced o) 'roduct J 0%ere?
Actual costs? irect &aterials FG,,< irect la(our FK4,,,< Varia(le
o.er%eads F-6,
Favourable variances? Material usage FG*6,< La(our e))iciency F-
Adverse variances? Material 'rice F++< La(our rate F-9< O.er%ead
e3'enditure FKG*
G* +4,,, units 0ere 'roduced o) 'roduct # 0%ere?
Actual costs? irect &aterials FH4,,,< irect la(our F-,,< Varia(le
o.er%eads F14+,,
Favourable variances? Material 'rice F66< La(our rate FG,< O.er%ead
e3'enditure F+-
Adverse variances? Material usage FG*+,< La(our e))iciency F9*6,*
@RC#SS
6* 6,, units 0ere 'roduced o) 'roduct T 0%ere?
Actual costs? irect &aterial F-4,,,< irect la(our F146,,< Varia(le
o.er%eads F-46,,
Favourable variances? Materials usage F-H< Material 'rice F-,< La(our
rate FG,< O.er%ead s'ending FG,*
@RC#SS
3uestion 6
2a5 #reen Manu)acturing Co Ltd uses a Standard Costing syste&* T%e
)ollo0ing details relate to t%e current &ont% during 0%ic% 146,, units
0ere 'roduced*
Standard cost ,er unit Actual cost o* 1.5<< units ,roduced
Material + ;g I F- 'er ;g +4H,, ;g I F+*6, 'er ;g
La(our - %ours I F1, 'er %our G4,,, %ours I F11 'er %our
:ou are re=uired to calculate t%e cost .ariances relating to &aterials and
la(our*
2(5 T%e #reenend Manu)acturing Co Ltd 'roduces a unit )or t%e co&'uter
industry* T%e )ollo0ing is t%e in)or&ation relating to t%e 'roduction o)
t%is unit during t%e )irst =uarter o) t%e current year 0%en 1,4,,, units
0ere 'roduced*
Standard cost ,er unit Actual cost o* ,roducing 1<.<<< units
Material 1, ;g I 6,' 'er ;g 1864,,, ;g I K,' 'er ;g
La(our G %ours I F1*H, 'er %our G,46,, %ours I F1*K, 'er %our
la(our*
2c5 Macrae Manu)acturing Co Ltd o'erates a Standard Costing syste&* T%e
)ollo0ing details relate to t%is &ont%*
Standard cost ,er unit Actual cost o* ,roducing 3.<<< units
Materials 6 ;g I F- 'er ;g 1641,, ;g I F+*8, 'er ;g
La(our 1 %our I F1, 'er %our 14G6, %ours I F8 'er %our
la(our*
2d5 T%e )ollo0ing data relates to Product O 0%ic% MacIntos% Manu)acturing
Co Ltd &a;es* T%is &ont% 64,,, units 0ere 'roduced*
Standard cost ,er unit Actual cost o* 5.<<< units ,roduced
Materials 1, ;g I F,*6 'er ;g G846,, ;g I F,*9, 'er ;g
La(our 6 %ours I F,*H 'er %our +64+,, %ours I F1*1, 'er %our
la(our*
@RC#SS
3uestion "
2a5 A''le0%ite Manu)acturing 'lc uses a Standard Costing syste&* T%e
le.els o) out'ut )or t%e current &ont% are as )ollo0s?
Actual out'ut +4,,, units
Judgeted out'ut 14H,, units
T%e )ollo0ing details relate to t%e current &ont%?
Standard cost ,er unit Actual cost o* 2.<<< units
Material + & I F+ 'er & G4K,, & I F1*K, 'er &
La(our + %ours I F1+*6, 'er %our 64,,, %ours I F1+ 'er %r
T%e o.er%eads are reco.ered on t%e (asis o) direct la(our %ours*
?udgeted out,ut 1.9<< Actual cost o* 2.<<< units
Varia(le o.er%eads F+ 'er la(our %our FH4,,,
Fi3ed o.er%eads F- 'er la(our %our F+,4,,,
:ou are re=uired to calculate t%e cost .ariances relating to &aterials4
la(our4 .aria(le and )i3ed o.er%eads*
2(5 Jro0n Manu)acturing uses a Standard Costing syste&* T%e le.els o)
out'ut )or t%e current &ont% are as )ollo0s?
Actual out'ut 64,,, units
Judgeted out'ut G46,, units
T%e )ollo0ing details relate to t%e current &ont%?
Standard cost ,er unit Actual cost o* 5.2<< units
Material - ;g I F- 'er ;g 164,,, ;g I F-*1, 'er ;g
La(our + %ours I FK 'er %our +,4,,, %ours I F9 'er %our
T%e o.er%eads are reco.ered on t%e (asis o) direct la(our %ours*
?udgeted out,ut 4.5<< Actual cost o* 5.2<< units
Varia(le o.er%eads F1 'er la(our %our F64,,,
Fi3ed o.er%eads F+ 'er la(our %our F-,4,,,
:ou are re=uired to calculate t%e cost .ariances relating to &aterials4
la(our4 .aria(le and )i3ed o.er%eads*
@RC#SS
3uestion 9
2a5 Ooda Manu)acturing 'lc %as di))iculty in identi)ying its o.er%ead
.ariances* T%e in)or&ation (elo0 s%o0s t%e (udgeted and actual details
collected )or t%e 'ast &ont%*
?udgeted Actual
Varia(le o.er%eads FH4,,, F94,,,
Fi3ed o.er%eads F64,,, F64K,,
Ooda Manu)acturing 'lc o'erates a Standard Costing syste& and %as
identi)ied t%e )ollo0ing %ourly details?
Judgeted %ours 64,,,
Standard %ours 64+,,
Actual %ours 64K,,
Using t%e in)or&ation a(o.e calculate all t%e o.er%ead .ariances*
2(5 :ell Manu)acturing 'lc %as identi)ied its o.er%ead e3'enses* T%e
in)or&ation (elo0 s%o0s t%e (udgeted and actual details t%ey %a.e
collected )or t%e 'ast &ont%*
?udgeted Actual
Varia(le o.er%eads F+,4,,, F++4,,,
Fi3ed o.er%eads F1H4,,, F1K4,,,
:ell Manu)acturing 'lc o'erates a Standard Costing syste& and %as
identi)ied t%e )ollo0ing %ourly details?
Judgeted %ours 64,,,
Standard %ours G46,,
Actual %ours G4,,,
Using t%e in)or&ation a(o.e calculate t%e o.er%ead .ariances*
@RC#SS
3uestion =
2a5 Ca&eron Co Ltd %as calculated t%e cost .ariances and are no0
're'aring t%eir re.enue .ariances )ro& t%e )ollo0ing in)or&ation?
?udgeted data Actual data
*or Aul+ *or Aul+
Sales 2in units5 64,,, G46,,
Sales 2'rice 'er unit5 F1+ F1-
2(5 u))y Co Ltd %as calculated cost .ariances and is no0 're'aring its
re.enue .ariances )ro& t%e )ollo0ing in)or&ation?
*or August *or August
Sales 2in units5 1,4,,, 84,,,
Sales 2'rice 'er unit5 F+, F1H
2c5 !d0ards Co Ltd %as calculated cost .ariances and is no0 're'aring its
*or 3 mont/s to *or 3 mont/s to
Aanuar+ Aanuar+
Sales 2in units5 1+46,, 164,,,
Sales 2'rice 'er unit5 F-, F-6
2d5 Ferguson Co Ltd %as calculated cost .ariances and is no0 're'aring its
*or current mont/ *or current mont/
Sales 2in units5 14,,, 146,,
Sales 2'rice 'er unit5 FK F6
S(20%#(&S
SECTION #
Answer 1
1aterial Calculations
2a5 Total Material Cost Variance C 2SC 7 AC5 C
FGG, 7 F6+, C FH, 2A5
Material Price Variance C 2SP 7 AP5AQ C
2FG, 7 FG,51- C F, 1- C ,
Material Usage Variance C 2SQ 7 AQ5SP C
211 7 1-5FG, C 7+ FG, C FH, 2A5
2(5 Total Material Cost Variance C 2SC 7 AC5 C
F146,, 7 F14KH, C F1H, 2A5
2F+6 7 F+H5K, C 7F- FK, C F1H, 2A5
2K, 7 K,5F+6 C , F+6 C ,
2c5 Total Material Cost Variance C 2SC 7 AC5 C
F-4,,, 7 F+4818 C FH1 2F5
2F- 7 F-589- C F, 89- C ,
214,,, 7 89-5F- C +9 F- C FH1 2F5
2d5 Total Material Cost Variance C 2SC 7 AC5 C
F94GH, 7 FK41K, C F14-+, 2F5
2F19 7 F1G5GG, C F- GG, C F14-+, 2F5
2GG, 7 GG,5F19 C , F19 C ,
2e5 Total Material Cost Variance C 2SC 7 AC5 C
F6+H 7 F-G, C F1HH 2F5
2FK 7 FG5H6 C F+ H6 C F19, 2F5
2HH 7 H65FK C - FK C F1H 2F5
S(20%#(&S
2)5 Total Material Cost Variance C 2SC 7 AC5 C
F-461, 7 F+4GK, C F14,6, 2F5
2F119 7 F1+-5+, C 7FK +, C F1+, 2A5
2-, 7+,5F119 C 1, F119 C F1419, 2F5
2g5 Total Material Cost Variance C 2SC 7 AC5 C
F+4-9, 7 F+4KG, C F+9, 2A5
2F16 7 F1K51K6 C 7F1 1K6 C F1K6 2A5
216H 71K65F16 C 7F9 16 C F1,6 2A5
S(20%#(&S
Answer 2
1* 1aterials
AC C F1-4,,,
SC C F,*K, 6 64,,, C F164,,,
Total Material Cost Variance C 2SC 7 AC5 C F164,,, 7 F1-4,,, C F+4,,, 2F5
Material Price Variance C 2SP 7 AP5AQ C 2SP AQ5 7 2AP AQ5
C 2F,*K, +K46,,5 7 F1-4,,,
C F1648,, 7 F1-4,,, C F+48,, 2F5
Material Usage Variance C 2SQ 7 AQ5SP C 2SQ SP5 7 2AQ SP5
C F164,,, 7 2+K46,, F,*K,5
C F164,,, 7 F1648,, C F8,, 2A5
2abour
AC C F64,,,
SC C F1*1, 1 64,,, C F646,,
Total La(our Cost Variance C 2SC 7 AC5 C F646,, 7 F64,,, C F6,, 2F5
La(our Rate Variance C 2SR 7 AR5A" C 2SR A"5 7 2AR A"5
C 2F1*1, G4H,,5 7 F64,,,
C F64+H, 7 F64,,, C F+H, 2F5
La(our !))iciency Variance C 2S" 7 A"5SR C 2S" SP5 7 2A" SR5
C F646,, 7 2G4H,, F1*1,5
C F646,, 7 F64+H, C F++, 2F5
+* 1aterials
AC C F6,4,,,
SC C F+*6, - 946,, C F6K4+6,
Total Material Cost Variance C 2SC 7 AC5 C F6K4+6, 7 F6,4,,, C FK4+6, 2F5
C 2F+*6, +14,,,5 7 F6,4,,,
C F6+46,, 7 F6,4,,, C F+46,, 2F5
C F6K4+6, 7 2+14,,, F+*6,5
C F6K4+6, 7 F6+46,, C F-496, 2F5
2abour
AC C F-,4,,,
SC C F1*+, G 946,, C F-K4,,,
Total La(our Cost Variance C 2SC 7 AC5 C F-K4,,, 7 F-,4,,, C FK4,,, 2F5
C 2F1*+, +H4,,,5 7 F-,4,,,
C F--4K,, 7 F-,4,,, C F-4K,, 2F5
C F-K4,,, 7 2+H4,,, F1*+,5
S(20%#(&S
C F-K4,,, 7 F--4K,, C F+4G,, 2F5
S(20%#(&S
-* 1aterials
AC C F+K4,,,
SC C F,*6, 6 1,4,,, C F+64,,,
Total Material Cost Variance C 2SC 7 AC5 C F+64,,, 7 F+K4,,, C F14,,, 2A5
C 2F,*6, 6G4,,,5 7 F+K4,,,
C F+94,,, 7 F+K4,,, C F14,,, 2F5
C F+64,,, 7 26G4,,, F,*6,5
C F+64,,, 7 F+94,,, C F+4,,, 2A5
2abour
AC C F-,4,,,
SC C F+ + 1,4,,, C FG,4,,,
Total La(our Cost Variance C 2SC 7 AC5 C FG,4,,, 7 F-,4,,, C F1,4,,, 2F5
C 2F+ 184,,,5 7 F-,4,,,
C F-H4,,, 7 F-,4,,, C FH4,,, 2F5
C FG,4,,, 7 2184,,, F+5
C FG,4,,, 7 F-H4,,, C F+4,,, 2F5
$ariable (ver/eads
AC C F164,,,
SC C F1 1 1,4,,, C F1,4,,,
Varia(le O.er%ead Cost Variance C 2SC 7 AC5 C F1,4,,, 7 F164,,, C F64,,, 2A5
Varia(le O.er%ead !3'enditure
Variance C 2SR 7 AR5A" C 2SR A"5 7 2AR A"5
C 2F1 1,4,,,5 7 F164,,,
C F1,4,,, 7 F164,,, C F64,,, 2A5
Varia(le O.er%ead !))iciency
Variance C 2S" 7 A"5SR C 2S" SP5 7 2A" SR5
C F1,4,,, 7 21,4,,, F15
C F1,4,,, 7 F1,4,,, C ,
G* 1aterials
AC C FG4,,,
SC C F1*6, + 14,,, C F-4,,,
Total Material Cost Variance C 2SC 7 AC5 C F-4,,, 7 FG4,,, C F14,,, a
C 2F1*6 +4,,,5 7 FG4,,,
C F-4,,, 7 FG4,,, C F14,,, 2A5
C F-4,,, 7 2+4,,, F1*65
S(20%#(&S
C F-4,,, 7 F-4,,, C ,
2abour
AC C F94,,,
SC C F,*H, K 14,,, C FG4H,,
Total La(our Cost Variance C 2SC 7 AC5 C FG4H,, 7 F94,,, C F+4+,, 2A5
C 2F,*H 94,,,5 7 F94,,,
C F64K,, 7 F94,,, C F14G,, 2A5
C FG4H,, 7 294,,, F,*H,5
C FG4H,, 7 F64K,, C FH,, 2A5
6* 1aterials
AC C F164,,,
SC C F- 1 -4,,, C F84,,,
Total Material Cost Variance C 2SC 7 AC5 C F84,,, 7 F164,,, C FK4,,, 2A5
C 2F- G4,,,5 7 F164,,,
C F1+4,,, 7 F164,,, C F-4,,, 2A5
C F84,,, 7 2FG4,,, F-5
C F84,,, 7 F1+4,,, C F-4,,, 2A5
2abour
AC C FH4,,,
SC C F1*+, + -4,,, C F94+,,
Total La(our Cost Variance C 2SC 7 AC5 C F94+,, 7 FH4,,, C FH,, 2A5
C 2F1*+, K4,,,5 7FH4,,,
C F94+,, 7 FH4,,, C FH,, 2A5
C F94+,, 7 2K4,,, F1*+,5
C F94+,, 7 F94+,, C ,
S(20%#(&S
Answer 3
1* 1aterials
Actual Cost FH,,< Price Variance FG, 2A5< Usage Variance F+, 2F5
Standard Cost C FH,, 7 FG, A F+, C F9H,
2abour
Actual Cost F-,,< >age Rate Variance F+, 2A5< !))iciency Variance F1, 2A5
Standard Cost C F-,, 7 F+, 7 F1, C F+9,
$ariable (ver/eads
Actual Cost F+,,< S'ending Variance F-, 2A5< !))iciency Variance F6, 2F5
Standard Cost C F+,, 7 F-, A F6, C F++,
+* 1aterials
Actual Cost F14,,,< Price Variance F1, 2F5< Usage Variance F1, 2F5
Standard Cost C F14,,, A F1, A F1, C F14,+,
2abour
Actual Cost FG,,< >age Rate Variance F-, 2A5< !))iciency Variance F+, 2A5
Standard Cost C FG,, 7 F-, 7 F+, C F-6,
$ariable (ver/eads
Actual Cost F+,,< S'ending Variance F1, 2A5< !))iciency Variance FG, 2F5
Standard Cost C F+,, 7 F1, A FG, C F+-,
-* 1aterials
Actual Cost F8,,< Price Variance F1, 2F5< Usage Variance F+, 2F5
Standard Cost C F8,, A F1, A F+, C F8-,
2abour
Actual Cost F+,,< >age Rate Variance F+, 2A5< !))iciency Variance F+, 2A5
Standard Cost C F+,, 7 F+, 7 F+, C F1K,
$ariable (ver/eads
Actual Cost F1,,< S'ending Variance F1, 2A5< !))iciency Variance F+, 2F5
Standard Cost C F1,, 7 F1, A F+, C F11,
G* 1aterials
Actual Cost F-,,< Price Variance F+, 2A5< Usage Variance F-, 2F5
Standard Cost C F-,, 7 F+, A F-, C F-1,
S(20%#(&S
2abour
Actual Cost FK,,< >age Rate Variance F1, 2A5< !))iciency Variance F+, 2A5
Standard Cost C FK,, 7 F1, 7 F+, C F69,
$ariable (ver/eads
Actual Cost F1,,< S'ending Variance F-, 2A5< !))iciency Variance FG, 2F5
Standard Cost C F1,, 7 F-, A FG, C F11,
S(20%#(&S
Answer 4
1* 1aterials
AC C F1H4,,,
SC C F,*6, G 1,4,,, C F+,4,,,
Total Material Cost Variance C 2SC 7 AC5 C F+,4,,, 7 F1H4,,, C F+4,,, 2F5
C 2F,*6 1K4,,,5 7 F1H4,,,
C FH4,,, 7 F1H4,,, C F1,4,,, 2A5
C F+,4,,, 7 21K4,,, F,*65
C F+,4,,, 7 FH4,,, C F1+4,,, 2F5
2abour
AC C FG,4,,,
SC C F1*G, - 1,4,,, C FG+4,,,
Total La(our Cost Variance C 2SC 7 AC5 C FG+4,,, 7 FG,4,,, C F+4,,, 2F5
C 2F1*G +94,,,5 7 FG,4,,,
C F-94H,, 7 FG,4,,, C F+4+,, 2A5
C FG+4,,, 7 2+94,,, F1*G,5
C FG+4,,, 7 F-94H,, C FG4+,, 2F5
+* 1aterials
AC C F+,4,,,
SC C FG + G4,,, C F-+4,,,
Total Material Cost Variance C 2SC 7 AC5 C F-+4,,, 7 F+,4,,, C F1+4,,, 2F5
C 2FG 1,4,,,5 7 F+,4,,,
C FG,4,,, 7 F+,4,,, C F+,4,,, 2F5
C F-+4,,, 7 21,4,,, FG5
C F-+4,,, 7 FG,4,,, C FH4,,, 2A5
2abour
AC C F-H4,,,
SC C F1*,, K G4,,, C F+G4,,,
Total La(our Cost Variance C 2SC 7 AC5 C F+G4,,, 7 F-H4,,, C F1G4,,, 2A5
C 2F1 G,4,,,5 7 F-H4,,,
C FG,4,,, 7 F-H4,,, C F+4,,, 2F5
C F+G4,,, 7 2G,4,,, F15
S(20%#(&S
C F+G4,,, 7 FG,4,,, C F1K4,,, 2A5
S(20%#(&S
-* 1aterials
AC C F1+4,,,
SC C F+*6, + +4,,, C F1,4,,,
Total Material Cost Variance C 2SC 7 AC5 C F1,4,,, 7 F1+4,,, C F+4,,, 2A5
C 2F+*6, K4,,,5 7 F1+4,,,
C F164,,, 7 F1+4,,, C F-4,,, 2F5
C F1,4,,, 7 2K4,,, F+*6,5
C F1,4,,, 7 F164,,, C F64,,, 2A5
2abour
AC C FG4,,,
SC C F1 1 +4,,, C F+4,,,
Total La(our Cost Variance C 2SC 7 AC5 C F+4,,, 7 FG4,,, C F+4,,, 2A5
C 2F1 64,,,5 7 FG4,,,
C F64,,, 7 FG4,,, C F14,,, 2F5
C F+4,,, 7 264,,, F15
C F+4,,, 7 F64,,, C F-4,,, 2A5
G* 1aterial
AC C F14,,,
SC C F1 1 14,,, C F14,,,
Total Material Cost Variance C 2SC 7 AC5 C F14,,, 7 F14,,, C ,
C F1 14,,,5 7 F14,,, C F14,,, 7 F14,,, C ,
C F14,,, 7 214,,, F15 C F14,,, 7 F14,,, ,
2abour
AC C FG4,,,
SC C F+ + 14,,, C FG4,,,
Total La(our Cost Variance C 2SC 7 AC5 C FG4,,, 7 FG4,,, C ,
C 2F+ +4,,,5 7 FG4,,, C FG4,,, 7 FG4,,, C ,
C FG4,,, 7 2+4,,, F+5 C FG4,,, 7 FG4,,, C ,
S(20%#(&S
6* 1aterial
AC C F14,,,
SC C F,*H, - 6,, C F14+,,
Total Material Cost Variance C 2SC 7 AC5 C F14+,, 7 F14,,, C F+,, 2F5
C 2F,*H 14G,,5 7 F14,,,
C F141+, 7 F14,,, C F1+, 2F5
C F14+,, 7 214G,, F,*H5
C F14+,, 7 F141+, C FH, 2F5
2abour
AC C FG,,
SC C F,*6, 1 6,, C F+6,
Total La(our Cost Variance C 2SC 7 AC5 C F+6, 7 FG,, C F16, 2A5
C 2F,*6 -6,5 7 FG,, C F196 7 FG,, C F++6 2A5
C F+6, 7 2-6, F,*65 C F+6, 7 F196 C F96 2F5
$ariable (ver/eads
AC C F146,,
SC C F1 + 6,, C F14,,,
Varia(le O.er%ead Cost Variance C 2SC 7 AC5 C F14,,, 7 F146,, C F6,, 2A5
C 2F1 H,,5 7 F146,, C FH,, 7 F146,,
C F9,, 2A5
C F14,,, 7 2H,, F15 C F14,,, 7 FH,,
C F+,, 2F5
K* 1aterial
AC C F1G4,,,
SC C F,*96 H +4,,, C F1+4,,,
Total Material Cost Variance C 2SC 7 AC5 C F1+4,,, 7 F1G4,,, C F+4,,, 2A5
C 2F,*96 164,,,5 7 F1G4,,,
C F114+6, 7 F1G4,,, C F+496, 2A5
C F1+4,,, 7 2164,,, F,*965
C F1+4,,, 7 F114+6, C F96, 2F5
S(20%#(&S
2abour
AC C F+,4,,,
SC C F,*-, +, +4,,, C F1+4,,,
Total La(our Cost Variance C 2SC 7 AC5 C F1+4,,, 7 F+,4,,, C FH4,,, 2A5
C 2F,*- 194,,,5 7 F+,4,,,
C F641,, 7 F+,4,,, C F1G48,, 2A5
C F1+4,,, 7 2194,,, F,*-5
C F1+4,,, 7 F641,, C FK48,, 2F5
$ariable (ver/eads
AC C F-4,,,
SC C F,*9, 1 +4,,, C F14G,,
Varia(le O.er%ead Cost Variance C 2SC 7 AC5 C F14G,, 7 F-4,,, C F14K,, 2A5
C 2F,*9 64,,,5 7 F-4,,,
C F-46,, 7 F-4,,, C F6,, 2F5
C F14G,, 7 264,,, F,*95
C F14G,, 7 F-46,, C F+41,, 2A5
S(20%#(&S
Answer 5
1* 1aterials
Actual Cost FG,,< Price Variance FK, 2A5< Usage Variance F6 2F5
Standard Cost C FG,, 7 FK, A F6 C F-G6
2abour
Actual Cost F1,,< >age Rate Variance FH, 2A5< !))iciency Variance F+, 2A5
Standard Cost C F1,, 7 FH 7 F+, C F9+
$ariable (ver/eads
Actual Cost F1,,< S'ending Variance F,< !))iciency Variance FK, 2F5
Standard Cost C F1,, A FK, C F1K,
+* 1aterials
Actual Cost F9,,< Price Variance FK, 2F5< Usage Variance F-, 2A5
Standard Cost C F9,, A FK, 7 F-, C F9-,
2abour
Actual Cost F14,,,< >age Rate Variance F6 2A5< !))iciency Variance F1, 2A5
Standard Cost C F14,,, 7 F6 7 F1, C F8H6
$ariable (ver/eads
Actual Cost F-,,< S'ending Variance FK 2A5< !))iciency Variance FG 2A5
Standard Cost C F-,, 7 FK 7 FG C F+8,
-* 1aterials
Actual Cost FG,,< Price Variance F++ 2A5< Usage Variance FG*6 2F5
Standard Cost C FG,, 7 F++ A FG*6 C F-H+*6
2abour
Actual Cost FK4,,,< >age Rate Variance F-9 2A5< !))iciency Variance F- 2F5
Standard Cost C FK4,,, 7 F-9 A F- C F648KK
$ariable (ver/eads
Actual Cost F-6,< S'ending Variance FKG 2A5< !))iciency Variance F,
Standard Cost C F-6, 7 FKG C F+HK
G* 1aterials
Actual Cost FH4,,,< Price Variance F66 2F5< Usage Variance FG*+ 2A5
Standard Cost C FH4,,, A F66 7 FG*+ C FH4,6,*H
S(20%#(&S
2abour
Actual Cost F-,,< >age Rate Variance FG, 2F5< !))iciency Variance F9*6 2A5
Standard Cost C F-,, A FG, 7 F9*6 C F--+*6
$ariable (ver/eads
Actual Cost F14+,,< S'ending Variance F+- 2F5< !))iciency Variance F,
Standard Cost C F14+,, A F+- C F14++-
6* 1aterials
Actual Cost F-4,,,< Price Variance F-, 2F5< Usage Variance F-H 2F5
Standard Cost C F-4,,, A F-, A F-H C F-4,KH
2abour
Actual Cost F146,,< >age Rate Variance FG, 2F5< !))iciency Variance F,
Standard Cost C F146,, A FG, C F146G,
$ariable (ver/eads
Actual Cost F-46,,< S'ending Variance FG, 2F5< !))iciency Variance F,
Standard Cost C F-46,, A FG, C F-46G,
S(20%#(&S
Answer 6
2a5 1aterial
AC C +4H,, F+*6 C F94,,,
SC C + F- 146,, C F84,,,
Total Material Cost Variance C 2SC 7 AC5 C F84,,, 7 F94,,, C F+4,,, 2F5
Material Price Variance C 2SP 7 AP5AQ C 2F- 7 F+*65+4H,,
C F,*6 +4H,, C F14G,, 2F5
Material Usage Variance C 2SQ 7 AQ5SP C [2+ 146,,5 7 +4H,,$F-
C +,, F- C FK,, 2F5
2abour
AC C G4,,, F11 C FGG4,,,
SC C - F1, 146,, C FG64,,,
Total La(our Cost Variance C 2SC 7 AC5 C FG64,,, 7 FGG4,,, C F14,,, 2F5
La(our Rate Variance C 2SR 7 AR5A" C 2F1, 7 F115G4,,,
C F1 G4,,, C FG4,,, 2A5
La(our !))iciency Variance C 2S" 7 A"5SR C [2- 146,,5 7 G4,,,$F1,
C 6,, F1, C F64,,, 2F5
2(5 1aterials
AC C 1864,,, F,*K, C F1194,,,
SC C 1, F,*6 1,4,,, C F6,4,,,
Total Material Cost Variance C 2SC 7 AC5 C F6,4,,, 7 F1194,,, C FK94,,, 2A5
Material Price Variance C 2SP 7 AP5AQ C 2F,*6 7 F,*K51864,,,
C F,*1 1864,,, C F1846,, 2A5
Material Usage Variance C 2SQ 7 AQ5SP
C [21, 1,4,,,5 7 1864,,,$F,*6
C 864,,, F,*6 CFG946,, 2A5
2abour
AC C G,46,, F1*K C FKG4H,,
SC C G F1*H 1,4,,, C F9+4,,,
Total La(our Cost Variance C 2SC 7 AC5 C F9+4,,, 7 FKG4H,, C F94+,, 2F5
La(our Rate Variance C 2SR 7 AR5A" C 2F1*H, 7 F1*K,5 G,46,,
C F,*+, G,46,, C FH41,, 2F5
La(our !))iciency Variance C 2S" 7 A"5SR
C [2G 1,4,,,5 7 G,46,,$F1*H,
C 6,, F1*H, C F8,, 2A5
S(20%#(&S
2c5 1aterials
AC C 1641,, F+*8, C FG-498,
SC C 6 F- -4,,, C FG64,,,
Total Material Cost Variance C 2SC 7 AC5 C FG64,,, 7 FG-498, C F14+1, 2F5
Material Price Variance C 2SP 7 AP5AQ C 2F- 7 F+*8,51641,,
C F,*1, 1641,, C F1461, 2F5
Material Usage Variance C 2SQ 7 AQ5SP C [26 -4,,,5 7 1641,,$F-
C 1,, F- C F-,, 2A5
2abour
AC C 14G6, F8 C F1-4,6,
SC C 1 F1, -4,,, C F-,4,,,
Total La(our Cost Variance C 2SC 7 AC5 C F-,4,,, 7 F1-4,6, C F1K486, 2F5
La(our Rate Variance C 2SR 7 AR5A" C 2F1, 7 F8514G6,
C F1 14G6, C F14G6, 2F5
La(our !))iciency Variance C 2S" 7 A"5SR C [21 -4,,,5 7 14G6,$F1,
C 1466, F1, C F1646,, 2F5
2d5 1aterials
AC C G846,, F,*9, C F-G4K6,
SC C 1, F,*6 64,,, C F+64,,,
Total Material Cost Variance C 2SC 7 AC5 C F+64,,, 7 F-G4K6, C F84K6, 2A5
Material Price Variance C 2SP 7 AP5AQ C 2F,*6, 7 F,*9,5G846,,
C F,*+, G846,, C F848,, 2A5
Material Usage Variance C 2SQ 7 AQ5SP
C [21, 64,,,5 7 G846,,$F,*6,
C 6,, F,*6, C F+6, 2F5
2abour
AC C +64+,, F1*1, C F+949+,
SC C 6 F,*H 64,,, C F+,4,,,
Total La(our Cost Variance C 2SC 7 AC5 C F+,4,,, 7 F+949+, C F949+, 2A5
La(our Rate Variance C 2SR 7 AR5A" C 2F,*H 7 F1*15+64+,,
C F,*-, +64+,, C F946K, 2A5
La(our !))iciency Variance C 2S" 7 A"5SR
C [26 64,,,5 7 +64+,,$F,*H,
C +,, F,*H, CF1K, 2A5
S(20%#(&S
Answer "
2a5 1aterials
AC C G4K,, F1*K, C F94-K,
SC C + F+*, +4,,, C FH4,,,
Total Material Cost Variance C 2SC 7 AC5 C FH4,,, 7 F94-K, C FKG, 2F5
Material Price Variance C 2SP 7 AP5AQ C 2F+ 7 F1*K,5G4K,,
C F,*G, G4K,, C F14HG, 2F5
Material Usage Variance C 2SQ 7 AQ5SP C [2+ +4,,,5 7 G4K,,$F+
C K,, F+ C F14+,, 2A5
2abour
AC C 64,,, F1+*,, C FK,4,,,
SC C + F1+*6, +4,,, C F6,4,,,
Total La(our Cost Variance C 2SC 7 AC5 C F6,4,,, 7 FK,4,,, C F1,4,,, 2A5
La(our Rate Variance C 2SR 7 AR5A" C 2F1+*6, 7 F1+564,,,
CF*6 64,,, C F+46,, 2F5
La(our !))iciency Variance C 2S" 7 A"5SR C [2+ +4,,,5 7 64,,,$F1+*6
C 14,,, F1+*6 C F1+46,, 2A5
$ariable (ver/eads
AC CFH4,,,
SC C + F+ +4,,, C FH4,,,
Total O.er%ead Cost Variance C SC 7 AC C FH4,,, 7 FH4,,, C F, 2A5
Variance C 2VOAR A"5 7 AC
C 2F+ 64,,,5 7 FH4,,, C F+4,,, 2F5
Variance C VOARB2S"7A"5
C F+2G4,,, 7 64,,,5 C F+4,,, 2A5
Fi!ed (ver/eads
AC C F+,4,,,
SC C + F- +4,,, C F1+4,,,
J" C + 14H,, C -4K,, %rs
S" C + +4,,, C G4,,, %rs
A" C 64,,, %rs
Fi3ed O.er%ead Cost Variance C SC 7 AC C F1+4,,, 7 F+,4,,, C FH4,,, 2A5
Fi3ed O.er%ead !3'enditure
Variance C 2FOAR J"5 7 AC
C 2F- -4K,,5 7 F+,4,,, C F84+,, 2A5
C F1+4,,, 7 2F- -4K,,5 C F14+,, 2F5
S(20%#(&S
Fi3ed O.er%ead !))iciency
Variance C FOARB2S" 7 A"5
C F-2G4,,, 7 64,,,5 C F-4,,, 2A5
Fi3ed O.er%ead Ca'acity
Variance C FOARB2A" 7 J"5
C F-264,,, 7 -4K,,5 C FG4+,, 2A5
2(5 1aterials
AC C 164,,, F-*1, C FGK46,,
SC C - F-*, 64+,, C FGK4H,,
Total Material Cost Variance C 2SC 7 AC5 C FGK4H,, 7 FGK46,, C F-,, 2F5
Material Price Variance C 2SP 7 AP5AQ C 2F- 7 F-*1,5164,,,
C F,*1, 164,,, C F146,, 2A5
Material Usage Variance C 2SQ 7 AQ5SP C [2- 64+,,5 7 164,,,$F-
C K,, F- C F14H,, 2F5
2abour
AC C +,4 ,,, F9 C F1G,4 ,,,
SC C + FK 64 +,, C FK+4 G,,
Tot al La(our Cost Vari ance C 2SC 7 AC5 C FK+4 G,, 7 F1G,4 ,,,
C F994 K,, 2A5
La(our Rat e Vari ance C 2SR 7 AR5A" C 2FK 7 F95+,4 ,,,
C +,4 ,,, F1 C F+,4 ,,, 2A5
La(our !))i ci ency Vari ance C 2S" 7 A"5SR C 21,4 G,, 7 +,4 ,,,5 FK
C F694K,, 2A5
$ariable (ver/eads
AC C F64 ,,,
SC C + F1 64 +,, C F1,4 G,,
Tot al O.er%ead Cost Vari ance C 2SC 7 AC5 C F1,4 G,, 7 F64 ,,,
C F64 G,, 2F5
Vari a(l e O.er%ead !3'endi t ure
Vari ance C 2VOAR A"5 7 AC
C 2F1 +,4 ,,,5 7 F64 ,,,
C F164 ,,, 2F5
Vari a(l e O.er%ead !))i ci ency
Vari ance C 2S" 7 A"5VOAR
C 21,4 G,, 7 +,4 ,,,5F1
C F84K,, 2A5
Fi!ed (ver/eads
AC C F-,4,,,
SC C + F+ 64+,, C F+,4H,,
J" C + G46,, C 84,,, %rs
S" C + 64+,, C 1,4G,, %rs
A" C +,4,,, %rs
S(20%#(&S
Fi3ed O.er%ead Cost Variance C SC 7 AC C F+,4H,, 7 F-,4,,, C F84+,, 2A5
Variance C 2FOAR J"5 7 AC
C 2F+ 84,,,5 7 F-,4,,, C F1+4,,, 2A5
C F+,4H,, 7 2F+ 84,,,5 C F+4H,, 2F5
Variance C FOARB2S" 7 A"5
C F+21,4G,, 7 +,4,,,5 C F184+,, 2A5
Variance C FOARB2A" 7 J"5
C F+2+,4,,, 7 84,,,5 C F++4,,, 2A5
S(20%#(&S
Answer 9
2a5 $ariable (ver/eads
VOAR C JOBJ" C FH4,,,B64,,, C F1*K,
SC C S" VOAR C 64+,, F1*K, C FH4-+,
Total O.er%ead Cost Variance C SC 7 AC C FH4-+, 7 F94,,, C F14-+, 2F5
Variance C 2VOARBSR A"5 7 AC
C 2F1*K 64K,,5 7 F94,,, C F148K, 2F5
Variance C VOARBSR2S"7A"5
C F1*K 264+,, 7 64K,,5 C FKG, 2A5
Fi!ed (ver/eads
FOAR CJOBJ" C F64,,,B64,,, C F1
SC C S" FOAR C 64+,, F1 C F64+,,
Fi3ed O.er%ead Cost Variance C SC 7 AC C F64+,, 7 F64K,, C FG,, 2A5
Variance C 2FOARBSR J"5 7 AC
C 2F1 64,,,5 7 F64K,, C FK,, 2A5
Fi3ed O.er%ead Volu&e Variance C SC 7 2FOARBSR J"5
C F64+,, 7 2F1 64,,,5 C F+,, 2F5
Variance C FOARBSR2S" 7 A"5
C F1264+,, 7 64K,,5 C FG,, 2A5
Variance C FOARBSR2A" 7 J"5
C F1264K,, 7 64,,,5 C FK,, 2A5
2(5 $ariable (ver/eads
VOAR C JOBJ" C F+,4,,,B64,,, C FG
SC C S" VOAR C G46,, FG C F1H4,,,
Total O.er%ead Cost Variance C SC 7 AC C F1H4,,, 7 F++4,,, C FG4,,, 2A5
Variance C 2VOARBSR A"5 7 AC
C 2FG G4,,,5 7 F++4,,, C FK4,,, 2A5
Variance C VOARBSR2S"7A"5
C FG2G46,, 7 G4,,,5 C F+4,,, 2F5
S(20%#(&S
Fi!ed (ver/eads
FOAR CJOBJ" C F1H4,,,B64,,, C F-*K,
SC C S" FOAR C G46,, F-*K, C F1K4+,,
Fi3ed O.er%ead Cost Variance C SC 7 AC C F1K4+,, 7 F1K4,,, C F+,, 2F5
Variance C 2FOARBSR J"5 7 AC
C 2F-*K, 64,,,5 7 F1K4,,, C F+4,,, 2F5
Fi3ed O.er%ead Volu&e Variance C SC 7 2FOARBSR J"5
C F1K4+,, 7 2F-*K, 64,,,5 C F14H,, 2A5
Variance C FOARBSR2S" 7 A"5
C F-*K,2G46,, 7 G4,,,5 C F14H,, 2F5
Variance C FOARBSR2A" 7 J"5
C F-*K,2G4,,, 7 64,,,5 C F-4K,, 2F5
S(20%#(&S
Answer =
2a5 Judgeted Re.enue C F1+ 64,,, C FK,4,,,
Actual Re.enue C F1- G46,, C F6H46,,
Total Sales Re.enue Variance C AR 7 JR C F6H46,, 7 FK,4,,, C F146,, 2A5
Sales Price Variance C 2AP 7 JP5AQ C 2F1- 7 F1+5 G46,, C FG46,, 2F5
Sales Volu&e Variance C 2AQ 7 JQ5JP C 2G46,, 7 64,,,5 F1+ C FK4,,, 2A5
2(5 Judgeted Re.enue C F+, 1,4,,, C F+,,4,,,
Actual Re.enue C F1H 84,,, C F1K+4,,,
Total Sales Re.enue Variance C AR 7 JR C F1K+4,,, 7 F+,,4,,, C F-H4,,, 2A5
Sales Price Variance C 2AP 7 JP5AQ C 2F1H 7 F+,5 84,,, C F1H4,,, 2A5
Sales Volu&e Variance C 2AQ 7 JQ5JP C 284,,, 7 1,4,,,5 F+, C F+,4,,, 2A5
2c5 Judgeted Re.enue C F-, 1+46,, C F-964,,,
Actual Re.enue C F-6 164,,, C F6+64,,,
Total Sales Re.enue Variance C AR 7 JR C F6+64,,, 7 F-964,,, C F16,4,,, 2F5
Sales Price Variance C 2AP 7 JP5AQ C 2F-6 7 F-,5 164,,, C F964,,, 2F5
Sales Volu&e Variance C 2AQ 7 JQ5JP C 2164,,, 7 1+46,,5 F-, C F964,,, 2F5
2d5 Judgeted Re.enue C FK 14,,, C FK4,,,
Actual Re.enue C F6 146,, C F946,,
Total Sales Re.enue Variance C AR 7 JR C F946,, 7 FK4,,, C F146,, 2F5
Sales Price Variance C 2AP 7 JP5AQ C 2F6 7 FK5 146,, C F146,, 2A5
Sales Volu&e Variance C 2AQ 7 JQ5JP C 2146,, 7 14,,,5 FK C F-4,,, 2F5

Variance Analysis Tcm4-118188

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NATIONAL QUALIFICATIONS CURRICULUM SUPPORT

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