Original Std Avg Mrkt Price

Price $12/kg $16/kg

Revised Std
Planning Operational

Planning variances:
- Variances that have been caused by the revision in the budget or standard cost, for which managers sh

Operational variances:
- Variances that are caused by differences between actual performance and the revised budget or stand
be held accountable.

When to revise?
- Market changes (beyond the control)
- Orginal std unrealistic

Why revise standards?

Revised standards will provide a realistic measure to evaluate the performance of managers, over the cont

Procedures for revising the standards:

- Procedures & authorisation from senior level
- No manager should be authorised to revise their own standards independently.
- Independently verifiable: Documenets on price changes, process changes
 Actual
$15/kg

or which managers should not be made responsible.

vised budget or standard, for which managers should

anagers, over the controllable aspects.

Material price variance: Price planning variance:
Actual Kgs - exp cost 408000 Actual Kgs - org exp cost 408000
54400 7.5 54400 7.5
Actual cost 410000 Actual Kgs - revised exp cost 435200
-2000 Adv 8 -27200

Material usage variance: Price operational variance:

Actual Prod - exp usage 50000 kgs Actual Kgs - revised exp cost 435200
10000 5
Actual usage 54400 Actual cost 410000
Diff in kgs -4400 kgs 25200
x SC/kg 7.5
-33000 Adv Recon -2000
 Planning: Original vs Revised
Operational: Revised vs Actual

Usage planning variance:

Actual Prod - org exp usage 50000 kgs
10000 5
Actual Prod - revised usage 53000
Adv Diff in kgs 5.3 -3000 kgs
x SC/kg 7.5
-22500 Adv

Usage operational variance:

Actual Prod - revised usage 53000 kgs
Fav Actual usage 54400
Diff in kgs -1400 kgs
Adv x SC/kg 7.5
-10500 Adv

Recon -33000 Adv

Labour rate variance: Rate planning variance:
Actual Kgs - exp cost 139200 Actual hrs - org exp cost 139200
8700 16 8700 16
Actual cost 130500 Actual hrs - revised exp cost 130500
8700 Fav 15 8700 Fav

Labour efficiency variance: Rate operational variance:

Actual Prod - exp usage 7000 hrs Actual hrs - revised exp cost 130500
14000 0.5
Actual usage 8700 Actual cost 130500
Diff in hrs -1700 hrs 0
x SC/hr 16
-27200 Adv Recon 8700 Adv
 Rate Usage Per unit
Org std 16 0.5 8
Revised 15 0.6 9

Efficiency planning variance:

Actual Prod - org exp usage 7000 hrs
14000 0.5
Actual Prod - revised usage 8400
Diff in hrs -1400 hrs
x Std rate/hr 16
-22400 Adv

Efficiency operational variance:

Actual Prod - revised usage 8400 hrs
Actual usage 8700
Diff in hrs -300 hrs
x Std rate/hr 16
-4800 Adv

Recon -27200 Adv

Price: Planning 13150 Price planning variance: Usage planning varia
Operational $ 5,260 Actual Kgs - org exp cost 131500 Actual Prod - org exp
26300 5 6000
Usage: Planning $0 Actual Kgs - revised exp cost 144650 Actual Prod - revised
Operational -11500 -13150 Adv Diff in kgs
x SC/kg
Price operational variance:
Actual Kgs - revised exp cost 144650
Usage operational va
Actual cost 139390 Actual Prod - revised
5260 Fav Actual usage
Diff in kgs
x SC/kg
Usage planning variance:
Actual Prod - org exp usage 24000 kgs
4
Actual Prod - revised usage 24000
Diff in kgs 0 kgs

Usage operational variance:

Actual Prod - revised usage 24000 kgs
Actual usage 26300
Diff in kgs -2300 kgs
5
-11500 Adv
Sales price variance: Sales price planning variance:
Actual sales - exp rev 120000 Actual sales - org exp rev 120000
12000 10
Actual revenue 60000 Actual sales - revised rev 54000
-60000 Adv 4.5 -66000 Adv

Recon -60000 Adv

Sales price operational variance:
Actual sales - revised rev 54000

Actual revenue 60000

6000 Fav
 Market size
Budgeted Industry Market share
LivSafe 20000 100000 0.2

15000 75000 Actual sales - LivSafe

Revised

Budgeted 20000 Planning Revised

Revised 15000 Actual
 Sales volume contribution variance:
Budgeted sales 400
Actual sales 320
Diff in units -80
x Std Contri/unit 40
-3200 Adv

Sales volume contribution planning variance:

Budgeted sales 400
Revised sales 300
Diff in units -100
x Std Contri/unit 40
-4000 Adv

Sales volume contribution opeartional variance:

Revised sales 300
Actual sales 320
Diff in units 20
x Std Contri/unit 40
800 Fav

Market size Sales volume planning

Market share Sales volume operational

les - LivSafe 14000

18.67%

15000 Operational
14000