AAA AAS SAS SSS

MATERIALS QUANTITY VARIANCE

AM x AQ x SP SM x AQ x SP SM x SQ x SP
 SSS

SM x SQ x SP
 AM x AQ x SP SM x AQ x SP
A 12,600 x 5 = 63,000 A 0.5 x 24,600 x 5 =
B 7,300 x 4 = 29,200 B 0.3 x 24,600 x 4 =
C 4,700 x 3 = 14,100 C 0.2 x 24,600 x 3 =
106,300
OR
Total Actual Input x Average Standard Price
24,600 x 4.3 = 105,780

MMV= 520 Unfavorable(UF)

SP SM x SQ x SP
61,500 A 0.5 x 24,000 x 5 = 60,000
29,520 B 0.3 x 24,000 x 4 = 28,800
14,760 C 0.2 x 24,000 x 3 = 14,400
105,780 103,200
OR
dard Price It can be:
200 x 516 = 103,200

MYV= 2,580 Unfavorable(UF)

 AM X AQ X AP AM X AQ X SP SM
A 10,716 X 1.5 = 16,074 A 10,716 X 1.25 = 13,395 A 0.55
B 17,484 X 1.9 = 33,220 B 17,484 X 2 = 34,968 C 0.45
49,294 48,363

MPV = 931 UF MMV=

Total Actual Input x Avera

28,200
 A 30.25 1.25 37.81
B 24.75 2 49.5
55 87.31

A 10,716
B 17,484
28,200

SM X AQ X SP SM X SQ X SP
X 28,200 X 1.25 = 19,388 A 0.55 X 27,500 X 1.25 =
X 28,200 X 2 = 25,380 C 0.45 X 27,500 X 2 =
44,768

MMV= 3,596 UF MYV= 1,111 UF

MMV= 4,707 UF

l Actual Input x Average Standard Price It maybe computed:

x 1.5875 = 44,768 500 x 87.3125 = 43,656
SP
18,906
24,750
43,656

43,656
FOH-VARIANCE

Two Way Variance Two Way Variance Two Way Variance

FxOH -Actual
AFOH AFOH AFOH
(Actual Factory Overheard) VOH -Actual
FxOH -Budget
BASH BASH BASH
(Budgeted allowed based on Standard Hours) VOH @SH
FxOH -Applied
SHSR SHSR SHSR
(Standard Hours * Standard Rate) VOH @SH

Three Way Variance Three Way Variance Three Way Variance

FxOH -Actual
AFOH AFOH AFOH
(Actual Factory Overheard) VOH -Actual
FxOH -Budget
BAAH BAAH BAAH
(Budgeted allowed based on Actual Hours) VOH @AH
FxOH -Budget
BASH BASH BASH
(Budgeted allowed based on Standard Hours) VOH @SH
FxOH -Applied
SHSR SHSR SHSR
(Standard Hours * Standard Rate) VOH @SH

Four Way Variance Four Way Variance

FxOH -Actual
AFOH Fixed OH SV
(Actual Factory Overheard) FxOH -Budget
VOH -Actual
BAAH Variable OH SV
(Budgeted allowed based on Actual Hours) VOH @SH
FxOH -Budget
BASH BAAH
(Budgeted allowed based on Standard Hours) VOH @AH Efficiency
FxOH -Budget Variance
SHSR BASH
(Standard Hours * Standard Rate) VOH @SH Volume
FxOH -Applied Variance
SHSR
VOH @SH
Two Way Variance

Budget Variance because managers are somewhat able to control

(Controllable
Variance) and influence this amount during the short run.

Volume Variance volume variance is the variable over which managers have
(Noncontrollable
Variance) the least influence and control, especially in the short run.

Three Way Variance

Spending Variance

This variance quantifies the effect of using more or less actual input
Efficiency Variance
than the standard allowed for the production achieved.

Volume Variance
 This amount normally represents a weighted average price variance of the multiple
components of FOH, although it can also reflect mismanagement of resources.
Spending Variance

VO spending variances are often caused by price differences

—paying higher or lower prices than the standard prices allowed.
 e variance of the multiple
agement of resources.
Two Way Variance
FxOH -Actual
AFOH
VOH -Actual

FxOH -Budget
BASH
VOH @SH
[1.75 x (2.50 x 4,500)]

FxOH -Applied
SHSR [3.10 x (2.50 x 4,500)]
VOH @SH
[1.75 x (2.50 x 4,500)]
 38,000
64,250
26,250 Spending
5,813 UF
38,750
58,438 9,688 UF
19,687.5
Volume
3,875 UF
34,875
54,563
19,687.5
Three Way Variance
FxOH -Actual
AFOH
VOH -Actual

FxOH -Budget
BAAH
VOH @AH
(1.75 x 10,000)

FxOH -Budget
BASH
VOH @SH
[1.75 x (2.50 x 4,500)]

FxOH -Applied
SHSR [3.10 x (2.50 x 4,500)]
VOH @SH
[1.75 x (2.50 x 4,500)]
 Two Way Variance
38,000 FxOH -Actual 38,000
64,250 AFOH
26,250 Spending VOH -Actual 26,250
8,000 UF
38,750 FxOH -Budget 38,750
56,250 BASH
17,500 VOH @SH 19,687.5
Efficiency [1.75 x (2.50 x 4,500)]
2,188 F 9,688 UF
38,750 FxOH -Applied 34,875
58,438 SHSR [3.10 x (2.50 x 4,500)]
19,687.5 Volume VOH @SH 19,687.5
3,875 UF [1.75 x (2.50 x 4,500)]

34,875
54,563
19,687.5
64,250
Spending
5,813 UF

58,438 9,688 UF

Volume
3,875 UF

54,563
Three Way Variance
FxOH -Actual
AFOH
VOH -Actual

FxOH -Budget
BAAH
VOH @AH
(1.75 x 10,000)

FxOH -Budget
BASH
VOH @SH
[1.75 x (2.50 x 4,500)]

FxOH -Applied
SHSR [3.10 x (2.50 x 4,500)]
VOH @SH
[1.75 x (2.50 x 4,500)]
 Spending Variance
38,000 FxOH -Actual 38,000 Fixed SV
64,250 VOH 750 F
26,250 Spending FxOH -Budget 38,750
8,000 UF
38,750 VOH -Actual 26,250 Variable SV
56,250 8,750 UF
17,500 VOH @AH 17,500.0
Efficiency (1.75 x 10,000) Efficiency
2,188 F 9,688 UF 2,188 F
38,750
58,438
19,687.5 Volume Volume
3,875 UF 3,875 UF
9,688 UF
34,875
54,563
19,687.5
 8,000

TOTAL VARIANCE