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Variance Formulas

The document outlines various variance calculations related to materials, labor, variable overhead, fixed overhead, and sales. Each category includes specific formulas for calculating cost variances, price variances, efficiency variances, and volume variances. These calculations are essential for analyzing financial performance and identifying discrepancies between standard and actual costs.

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ENOCH AHIAFOR
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14 views3 pages

Variance Formulas

The document outlines various variance calculations related to materials, labor, variable overhead, fixed overhead, and sales. Each category includes specific formulas for calculating cost variances, price variances, efficiency variances, and volume variances. These calculations are essential for analyzing financial performance and identifying discrepancies between standard and actual costs.

Uploaded by

ENOCH AHIAFOR
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1.

Material Variances

a) Material Cost Variance (MCV)

= (Standard Quantity × Standard Price) – (Actual Quantity × Actual Price)


➔ MCV = (SQ × SP) – (AQ × AP)

b) Material Price Variance (MPV)

= Actual Quantity × (Standard Price – Actual Price)


➔ MPV = AQ × (SP – AP)

c) Material Usage Variance (MUV)

= Standard Price × (Standard Quantity – Actual Quantity)


➔ MUV = SP × (SQ – AQ)

2. Labor Variances

a) Labor Cost Variance (LCV)

= (Standard Hours × Standard Rate) – (Actual Hours × Actual Rate)


➔ LCV = (SH × SR) – (AH × AR)

b) Labor Rate Variance (LRV)

= Actual Hours × (Standard Rate – Actual Rate)


➔ LRV = AH × (SR – AR)

c) Labor Efficiency Variance (LEV)

= Standard Rate × (Standard Hours – Actual Hours)


➔ LEV = SR × (SH – AH)

3. Variable Overhead Variances


a) Variable Overhead Cost Variance (VOCV)

= (Standard Hours × Standard Rate) – (Actual Hours × Actual Rate)


➔ VOCV = (SH × SR) – (AH × AR)

b) Variable Overhead Expenditure Variance (VOEV)

= Actual Hours × (Standard Rate – Actual Rate)


➔ VOEV = AH × (SR – AR)

c) Variable Overhead Efficiency Variance (VOEffV)

= Standard Rate × (Standard Hours – Actual Hours)


➔ VOEffV = SR × (SH – AH)

4. Fixed Overhead Variances

a) Fixed Overhead Cost Variance (FOCV)

= Budgeted Fixed Overhead – Actual Fixed Overhead


➔ FOCV = Budgeted FO – Actual FO

b) Fixed Overhead Volume Variance (FOVV)

= (Budgeted Hours – Actual Hours) × Standard Rate


➔ FOVV = (Budgeted Hours – Actual Hours) × SR

c) Fixed Overhead Expenditure Variance (FOEV)

= Budgeted Fixed Overhead – Actual Fixed Overhead


➔ FOEV = Budgeted FO – Actual FO

5. Sales Variances

a) Sales Price Variance (SPV)


= Actual Quantity Sold × (Actual Price – Standard Price)
➔ SPV = AQ × (AP – SP)

b) Sales Volume Variance (SVV)

= Standard Profit × (Actual Quantity – Budgeted Quantity)


➔ SVV = SP × (AQ – BQ)

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