# Variance Analysis

## Direct Material Usage Variance: Definition, Formula, Explanation, Analysis, And Example

Definition: Direct Material Usage Variance measures efficiency in material or material consumption by comparing standard material used for actual production units with actual material usages or consumption. This variance calculation is essential for management to assess if the current production system is running effectively or not. Negative variance generally means production is not run effectively, …

## Direct Material Price Variance: Definition, Formula Explanation, Analysis, And Example

Definition: Direct Material Price Variance is the difference between the actual price paid for purchased materials and their standard cost at the actual direct material purchased amount. It helps to monitor the costs incurred to produce the goods. It is really important to know how much the price fluctuation had potentially affected the total production …

## Sales Mix Variance: Definition, Formula, Explanation, Analysis, And Example

Definition: Sales Mix variance measures the change in profit or contribution that is attributable to the changes in the proportion of different products from the standard mix. In simple words, it measures the difference in unit volumes in the actual sales mix from the budgeted sales mix. In reality, there are always some differences between …

## 5 Limitations of Standard Costing & Variance Analysis

Standard costing: Standard costing is an eminent way of keeping the business costs on track. It is the process of estimating future costs and expenses and comparing them to the actual data in order to analyze how the differences can be manipulated or altered for the betterment of the company. Several budgets are prepared by …

## Sales Volume Variance: Definition, Formula, Analysis, and Example

Definition: Sales volume variance quantifies the increase or decrease in profit due to a difference between the actual number of units sold and the budgeted number of units sold. In cost and management accounting, a variance is a difference between the actual cost/revenue and standard cost/revenue. Formula: The formula for calculating sales volume variance is …

## Sales price variance: Definition, Formula, Explanation, Analysis, and Example

Definition: Sales price variance measures the increase or decrease in revenue due to a difference in the standard selling price and actual selling price. Standard price is the price at which the business expects to sell its products. In cost management accounting, variance analysis is performed each year with the aim of keeping costs and …

## Sales Quantity Variance: Definition, Formula, Explanation, And Example

Definition: A difference between the number of units used/sold and the number of units that were anticipated to be used/sold is known as a quantity variance. Hence, the sales quantity variance assesses the increase or decrease in budgeted profit occurring due to a variation between the actual and budgeted number of units sold. Formula: There …

## What is Variance Analysis? Definition, Explanation, 4 Types of Variances

Definition: Variance analysis is an important aspect of cost and management accounting systems. It is the process of comparing the budgeted/standard costs or revenue to the actual costs incurred or revenue earned. Variance analysis is more on cost or management accounting rather than financial accounting. It is generally served management for their performance management especially …

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