Importance and Limitation of Sales Price Variance

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 Quantity Variance

Introduction: Sales Quantity variance is the difference between actual quantity and budgeted quantity of unit sold during a specific time and multiply the resulted quantity with 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 …

Fixed Overhead Volume, Capacity, and Efficiency Variance

Definition: Fixed overhead volume variance: It is defined as the difference between fixed overheads actually incurred and fixed overheads applied to units actually produced. Fixed overhead capacity variance: It is the difference between budgeted fixed overheads and fixed overheads applied to the number of hours worked. Fixed overhead efficiency variance: It is the difference between …

Fixed Overhead Spending Variance: Definition, Formula, Explanation, And Analysis

Definition: Fixed overhead spending variance, also known as fixed overhead expenditure variance, measures the difference between actual fixed costs that were incurred and the budgeted fixed costs. It is one of the two parts of fixed overhead total variance; the other being fixed overhead volume variance. Formula: Budgeted fixed overheads – Actual fixed overheads = …

Fixed Overhead Total Variance: Definition, Formula, Explanation, And Illustration

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 …

Variable Overhead Efficiency Variance: Definition, Formula, Explanation, And Analysis

Definition: A variable overhead efficiency variance is one of the two contents of a total variable overhead variance. It is defined as the difference between the actual hours worked and the standard hours that were required for budgeted production at the standard rate. A variable overhead is an indirect production expense that varies on the …

Variable Overhead Spending Variance: Definition, Formula, Explanation, And Analysis

Definition: Variable overhead spending variance is defined as the difference between the actual rate 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. A variable overhead is an indirect expense that increases as …

Direct Labor Rate Variance: Definition, Formula, Explanation, Analysis, And Example

Definition: Direct Labor rate variance indicates the actual cost of any change from the standard labor rate of remuneration. In simple words, it measures the difference between the actual and expected cost of labor. Direct labor rate variance is also called direct labor price variance or spending variance or wage rate variance. In terms of …

Direct Labor Efficiency Variance: Definition, Formula, Explanation, Analysis, And Example

Definition: Direct labor efficiency variance depicts how efficient the direct labor was in making the actual output that was produced by the direct labor. The direct labor efficiency variance compares the standard hours that 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 …

Direct Material Yield Variance: Definition, Formula, Explanation, And Analysis

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. In simple words, it measures differences between output produced on a given dimension or level and the level of output …