Sales Price Variance Sales price variance emerges when the actual selling price in dollars of a commodity varies from the budgeted or standard unit price in dollars. In simple words, we can say that the net difference in value by comparing the actual selling price with the budgeted selling price of a commodity. Or we […]
Importance and Limitation of Sales Price Variance Read More »
Sales quantity variance is the difference between actual quantity and budgeted quantity of units sold during a specific time and multiplying the resulting quantity with the standard price. The formula for calculating sales quantity variance is simple and easy to understand, Sales quantity variance= (Expected Quantity – Actual Quantity) × Standard Rate Example to Understand
What is the Importance and Limitation of Sales Quantity Variance? Read More »
Definition: Formula: Explanation: Fixed overhead total variance can be divided into two separate variances i.e. fixed overhead spending variance and fixed overhead volume variance. Fixed overhead volume variance is further divided into two more components; fixed overhead capacity variance and fixed overhead efficiency variance. Fixed overhead variances measure the over-or under-absorption of fixed overheads. It
Fixed Overhead Volume, Capacity, and Efficiency Variance Read More »
Definition: Fixed overhead spending variance, also known as fixed overhead expenditure variance, measures the difference between actual fixed costs incurred and the budgeted fixed costs. It is one of the two parts of fixed overhead total variance; the other is fixed overhead volume variance. Formula: Budgeted fixed overheads – Actual fixed overheads = Fixed overhead
What is Fixed Overhead Spending Variance? Definition, Formula, Explanation, And Analysis Read More »
Definition: A fixed overhead total variance is the difference between the actual fixed overheads that were incurred and the fixed overheads that were absorbed during the year. Fixed overhead total variance is constituted of fixed overhead expenditure variance and fixed overhead volume variance. Absorbing or flexing fixed overheads means the allocation of fixed production overheads
Fixed Overhead Total Variance: Definition, Formula, Explanation, And Illustration Read More »
Definition: A variable overhead efficiency variance is one of the two contents of a total variable overhead variance. It is the difference between the actual hours worked and the standard hours required for budgeted production at the standard rate. Variable overhead is an indirect production expense that varies based on production. It includes salaries and
Definition: Variable overhead spending variance is the difference between the actual and budgeted rate of spending on variable overheads. Overheads are production expenditures that are indirect i.e. can’t be traced back to one unit of production like direct material or direct labor. Variable overhead is an indirect expense that increases as production increases and decreases
Definition: Direct Labor rate variance indicates the actual cost of any change from the standard labor rate of remuneration. Simply put, it measures the difference between the actual and expected cost of labor. Direct labor rate variance is also called direct labor price or spending or wage rate variance. In calculation, it is very similar
Direct Labor Rate Variance: Definition, Formula, Explanation, Analysis, And Example Read More »
Definition: Direct labor efficiency variance depicts how efficient the direct labor was in making the actual output produced by the direct labor. The direct labor efficiency variance compares the standard hours it should have taken to make the actual output Vs. the actual hours it took and multiplies the difference in hours by the standard cost per direct labor
Definition: Direct Material Yield Variance is a subdivision of material usage variance. It measures the effect on the cost of any difference between the actual usage of material and that justified by the output produced. Simply, it measures differences between output produced on a given dimension or level and the level of output achieved during
What is Direct Material Yield Variance? Definition, Formula, Explanation, And Analysis Read More »
