Scribd
Upload
854 views2 pages

Standard Costing Variance Formulas

Standard costing involves calculating variances for materials, labor, and overhead. [1] For materials, the variances are for material price and quantity based on actual vs standard quantities and prices. [2] For labor, variances are calculated for labor rate and efficiency based on comparing actual and standard hours and rates. [3] Overhead variances include controllable, volume, spending, variable efficiency, variable spending, and fixed spending variances, and are calculated by comparing actual, budgeted, and standard overhead amounts.

Uploaded by

Douzo plays
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
854 views2 pages

Standard Costing Variance Formulas

Standard costing involves calculating variances for materials, labor, and overhead. [1] For materials, the variances are for material price and quantity based on actual vs standard quantities and prices. [2] For labor, variances are calculated for labor rate and efficiency based on comparing actual and standard hours and rates. [3] Overhead variances include controllable, volume, spending, variable efficiency, variable spending, and fixed spending variances, and are calculated by comparing actual, budgeted, and standard overhead amounts.

Uploaded by

Douzo plays
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
  • Standard Costing: Material and Labor Variances
  • Standard Costing: Overhead Variances

Standard costing

FORMULAS:

1. Material Variances (AAS)

a. AQ x AP MPV - Material Price Variance


MQV - Material Quantity Variance
AQ – Actual Quantity
(a minus b) = Material Price Variance SQ – Standard Quantity
b. AQ x SP AP – Actual Price
SP – Standard Price
(b minus c) = Material Quantity Variance
c. SQ x SP Total Material Variance

MPV = AQ (AP – SP)


MQV = SP (AQ – SQ)
Total Material Variance = MPV + MQV

2. Labor Variances (AAS)


LRV – Labor Rate Variance
LEV - Labor Efficiency Variance
a. AH x AR AH – Actual Hours
SH – Standard Hours
AR – Actual Rate
(a minus b) = Labor Rate Variance
b. AH x SR SR – Standard Rate

(b minus c) = Labor Efficiency Variance


c. SH x SR Total Labor Variance

LRV = AH (AR – SR)


LEV = SR (AH – SH)
Total Labor Variance = LRV + LEV
3. Overhead Variances:

Variable
Spending
Spending Variance

Controllable
Variance < Fixed
Spending
Variance
Variance
< Variable Variable
Efficiency Efficiency
Total
Overhead
Variance
< Volume
Variance

Volume
Variance

Volume
Variance Variance Variance

Total Overhead Variance = AFOH – SFOH TOH – Total Overhead Variance


Controllable Variance = AFOH – BASH AFOH –Actual Factory Overhead
Volume Variance = BASH – SFOH SFOH – Standard Factory Overhead
Spending Variance = AFOH – BAAH BASH – Budgeted Allowed on Standard Hours
Variable Efficiency Variance = BAAH – BASH BAAH – Budgeted Allowed on Actual Hours
CV- Controllable Variance
VV- Volume Variance
SV –Spending Variance
VEV – Variable Efficiency Variance
Variable overhead variance (AAS)
VSV – Variable Spending Variance
FSV – Fixed Spending Variance
a. Actual Variable OH
Variable
(a – b) = Spending
b. AH x Variable OH rate Variance

(b – c) =
Variable Spending
c. SH x Variable OH rate
Efficiency Variance
Variance
Controllable
Fixed overhead variance (ABS)
Variance

a. Actual fixed OH Variable


Efficiency
Fixed
Variance Total
(a – b) = Spending Overhead
b. Budgeted fixed at Variance
Normal Capacity Variance

(b – c) = Volume Volume Volume


c. SH x Fixed OH rate Variance Variance Variance

You might also like