Standard Costing Part2

ACCA F5 - Performance Management 

ACCA F2 - Management Accounting



Total Sales Margin Variance

Sales margin Variance

Ø  Sales margin price variance - the difference in actual sales price and expected standard sales price for actual quantity sold

Ø  Sales margin quantity variance - the difference in actual sales volume and expected standard sales volume expressed at standard price

Total Cost Variance

Material Variance

Ø  Material price variance - the difference in actual price paid and expected standard price for actual quantity used

Ø  Material usage variance - the difference in actual material consumed and expected standard usage expressed at standard price

Labour Variance

Ø  Labor rate variance - the difference in actual rate paid and expected standard rate for actual hour worked

Ø  Labor efficiency variance - the difference in actual hour worked and expected standard hour expressed at standard rate

Variable Overhead Variance

Ø  Variable overhead expenditure variance - the difference in actual variable overhead incurred and expected standard variable overhead rate for actual direct labor or machine hours of input

Ø  Variable overhead efficiency variance - the difference in actual hour of input and expected standard hour input expressed at standard variable overhead rate

Fixed Overhead Variance (Absorption Costing)

Ø  Fixed overhead expenditure variance - the difference in actual fixed overhead incurred and expected standard fixed overhead expenditure per absorption unit  (where absorption unit is actual direct labor or machine hours of input)

Ø  Fixed overhead volume variance - the difference in standard hour for actual production per standard fixed overhead absorption rate and expected standard overhead as per budgeted

o   Fixed overhead capacity variance - the difference in actual hour of input per standard fixed overhead absorption rate and expected standard overhead as per budgeted

o   Fixed overhead efficiency variance - the difference in standard hour for actual production per standard fixed overhead absorption rate and actual hour of input per standard fixed overhead absorption rate

CIMA Article: Standard Costing and Variance Analysis