Variance Analysis

Formula Sheet
Material Variances
1. Material Price Variance
Material Price Variance = Actual Quantity Used (Std Price Per Kg − Actual Price Per Kg)
Where’s
Actual Total Material Cost
Actual Price Per Kg =
No of Kgs
2. Material Usage Variance
Material Usage Variance
= Std Price Per Kg (Std Quantity for Actual Output − Actual Quantity)
Where’s
Std Quantity for Actual Output = Std Quantity for One Unit ∗ No of Units Produced
3. Material Total Cost Variance
Material Total Cost Variance
= Std Material Cost for Actual Output − Actual Total Material Cost
OR
Material Total Cost Variance = Material Price Variance + Material Usage Variance
Where’s
Std Material Cost for Actual Output
= Std Quantity for One Unit ∗ Std Material Price Per Kg
∗ No of Units Produced
OR
Std Material Cost for Actual Output = Std Material Cost Per Unit ∗ No of Units Produced

Labour Variances
4. Labour Rate Variance
Labour Rate Variance
= Actual Worked Hours (Std Labour Rate Per Hour
− Actual Labour Rate Per Hour)
Where’s
Total Actual Labour Cost
Actual Labour Rate Per Hour =
No of Paid Hours
 5. Labour Efficiency Variance
Labour Efficiency Variance
= Std Labour Rate Per Hour (Std Labour Hours for Actual Output
− Actual Hours worked)
Where’s
Std hours for Actual Output = Std Labour hours for One Unit ∗ No of Units Produced
6. Labour Total Cost Variance
Labour Total Cost Variance
= Std Labour Cost for Actual Output − Actual Total Labour Cost
OR
Labour Total Cost Variance = Labour Rate Varaince + Labour Efficiency Variance
Where’s
Std Laour Cost for Actual Output
= Std Labour Hours for One Unit ∗ Std Labour Rate Per Hour
∗ No of Units Produced
OR
Std Laour Cost for Actual Output = Std Labour Cost Per Unit ∗ No of Units Produced

VOH Variances
7. VOH Rate Variance
VOH Rate Variance
= Actual Worked Hours (Std VOH Rate Per Hour
− Actual VOH Rate Per Hour)
Where’s
Total Actual VOH Cost
Actual VOH Rate Per Hour =
No of Hours
8. VOH Efficiency Variance
VOH Efficiency Variance
= Std VOH Rate Per Hour (Std Hours for Actual Output
− Actual Hours worked)
Where’s
Std hours for Actual Output = Std hours for One Unit ∗ No of Units Produced
9. VOH Total Cost Variance
VOH Total Cost Variance = Std VOH for Actual Output − Actual VOH Cost
 OR
VOH Total Cost Variance = VOH Rate Variance + VOH Efficiency Variance
Where’s
Std VOH Cost for Actual Output
= Std Hours for One Unit ∗ Std VOH Rate Per Hour ∗ No of Units Produced
OR
Std VOH Cost for Actual Output = Std VOH Cost Per Unit ∗ No of Units Produced

FOH Variances
10. FOH Expenditure Variance
FOH Expenditure Variance = Budgeted FOH − Actual FOH
11. FOH Volume Variance
FOH Volume Variance = Std FOH Rate Per Unit (Actual Units − Budgeted Units)
OR
FOH Volume Variance
= FOH Volume Efficiency Variance + FOH Volume Capacity Varaince
Where’s
Total Budgeted FOH Cost
Std FOH Rate Per Unit =
No of Budgeted Units
12. FOH Volume Efficiency Variance
FOH Volume Efficiency Variance
= Std FOH Rate Per Hour (Std hours for Actual Output
− Actual Output hours)
Where’s
Total Budgeted FOH Cost
Std FOH Rate Per Hour =
No of Budgeted Hours
13. FOH Volume Capacity Variance
FOH Volume Capacity Variance
= Std FOH Rate Per Hour (Actual Hours − Budgeted Hours)
14. FOH Total Cost Variance
FOH Total Cost Variance = Std FOH Cost for Actual Output − Actual FOH Cost
OR
FOH Total Cost Variance = FOH Expenditure Variance + FOH Volume Variance
 OR
FOH Total Cost Variance
= FOH Expenditure Variance + FOH Volume Efficiency Variance
+ FOH Volume Capacity Variance
Where’s
Std FOH Cost for Actual Output
= Std Hours for One Unit ∗ Std FOH Rate Per Hour ∗ No of Units Produced
OR
Std FOH Cost for Actual Output = Std FOH Cost Per Unit ∗ No of Units Produced

Sales Variances
15. Sales Price Variance
Sales Price Variance
= Actual Sold Units (Actual Sale Price Per Unit − Std Sale Price Per Unit)
Where’s
Total Actual Sales Revenue
Actual Sale Price Per Unit =
No. of Units Sold
16. Sales Volume Variance (Under Absorption Costing System)
Sales Volume Variance
= Std Profit Margin Per Unit (Actual Sales Units − Budgeted Sales Units)
Where’s
Gross Profit Margin Per Unit = Sales Price − (D. M + D. L + VOH + FOH)
OR
Gross Profit Margin Per Unit = Sales Price − (Variable Cost + FOH)
17. Sales Volume Variance (Under Marginal Costing System)
Sales Volume Variance
= Std Contribution Margin Per Unit (Actual Sales Units
− Budgeted Sales Units)
Where’s
Gross Contribution Margin Per Unit = Sales Price − (D. M + D. L + VOH)
OR
Gross Contribution Margin Per Unit = Sales Price − (Variable Cost)