RIZAL TECHNOLOGICAL UNIVERSITY

Boni Ave., Mandaluyong City

College of Business and Entrepreneurial Technology

STRATEGIC COST ACCOUNTING Variance Analysis – is the difference between the

standard cost and actual cost.
Name: Santos, Andrew Miguel L.
Section: CBET-01-401A Actual cost > Std. Cost Actual Cost < Std, Cost
Date: June 13, 2020
Unfavorable (debit Favorable (credit var.)
var.)
STANDARD COSTING AND VARIANCE Added to the COGS Deducted to COGS
ANALYSIS

Actions to DIRECT MATERIAL VARIANCES

Plan implement Results
plan Case 1: where actual qty.purchased = actual qty. used
Actual Standard
Comparison AQ x AP AQ x SP SQ x SP
of actual and
Evaluation planned
results
DM price variance DM qty. variance
Figure 1.1
SQ can be computed as = actual production x std.
Planning Stage – connotes the starting point of qty. per unit.
setting standard costs.
- Therefore, what is Standard costs?
Case 2: where actual qty. purchased. ≠ actual qty
Standard costs – is a predetermined costs of used
production that should be attained under
condition. Actual Standard
AQ x AP AQ(P) x SP AQ(U)xSP SQ x SP
Comparison of planned and actual results – this
phase results to variance.
- Why there is a variance? DM price variance DM qty. variance
Because there is a concept about
MANAGEMENT BY EXCEPTION where the
DIRECT LABOR VARIANCES
management is giving attention only to those
situations in which LARGE VARIANCES - It is the same template for CASE 1 but change the
occur. (Whether favorable or unfavorable) AQ with AH (Actual Hour), AP to AR (Actual Rate),
SQ to SH (Standard Hour) and SP to SR (Standard
Rate). The difference between ACTUAL and (AH x
(The said topic will focus merely in Variance SR) is called DL Rate Variance. The difference
Analysis because it is the core of this topic.) between STANDARD and (AH x SR) is DL
Efficiency Variance.
 RIZAL TECHNOLOGICAL UNIVERSITY
Boni Ave., Mandaluyong City
College of Business and Entrepreneurial Technology

MIX AND YIELD VARIANCES

Sub variances of DM qty. variances and DL Std. Hrs = Actual production x Std. hr. per unit
efficiency var.

Actual
3 Way Analysis
AQ x AP
DM price
variance Actual
AQ x SP AH x AR
DM mix
variance BAAH (Budgeted Spending
AQ x WASP DM qty. variance Allowed for Actual Hrs. Variance
DM yield
Standard variance Budgeted Fixed OH (NC x SR)
SQ x SP Variable OH (AH x Std. VOH Rate)

BASH (Budgeted Efficiency

WASP (Weighted Average Std. Price) Allowed for Std. Hrs. Variance

- Total Std. Cost / Total Std. Qty Budgeted Fixed OH (NC x SR)
OVERHEAD VARIANCES Variable OH (SH x Std. VOH Rate)
Volume
There is 2 way, 3 way and 4 way to account overhead Standard Variance
variances. The reason for that said ways to account SH x SR
overhead variances is because of UNSATISFIED
MANAGEMENT without comparison.
4 Way Analysis
2 Way Analysis
Variable Overhead
Actual
AH x AR Actual Budgeted Standard
AH x AR AH x S.(VOH)Rate SH x Std.(VOH)Rate
BASH (Budgeted Controllable
Allowance Std. Hrs) Variance
Spending Efficiency
Budgeted Fixed OH (NC x SR) Variance Variance
Variable (SH x Std. (VOH) rate)
Volume
Standard Variance Fixed Overhead
SH x SR Actual Budgeted Standard
AH x AR NC x S.(Fixed)Rate SH x Std.(F)Rate
Where:
Spending Volume
NC= is NORMAL CAPACITY
Variance Variance
Actual – fixed and variable is combined