Sales Variances
actual revenue – (actual units sold * std selling price) = sales price variance
(actual units sold * std margin per unit) – (budgeted units sold * std margin per unit) = sales volume variance
Note std margin will be std profit if using absorption costing * std contribution if using marginal costing
Material Variances
(std qty * std price) – (actual quantity * std price) = usage variance
(actual quantity * std price) – (actual quantity * actual price) = price variance
Labour Variances
(std hrs * std rate) – (actual hrs * std rate) = efficiency variance
(actual hrs * std rate) – (actual hrs * actual rate) = rate variance
Note these assume no idle time
Idle Time Variance
(actual hrs worked * std rate per hr) – (actual hrs paid * std rate per hr) = idle time variance
Variance Overhead Variances
(std hrs worked * std rate) – (actual hrs worked * std rate) = efficiency variance
(actual hrs worked * std rate) – (actual hrs worked * actual rate) = expenditure variance
Fixed Overhead Variances
budgeted fixed prod overhead – actual fixed prod overhead = expenditure variance
(actual prod units – budgeted prod units) * std fixed overhead cost per unit = volume variance
(actual hours * FOAR per hr) – budgeted expenditure = fixed overhead capacity variance
(std hrs for actual prod * FOAR per hr) – (actual hrs * FOAR per hr) = fixed overhead efficiency variance
Planning Variances
planning variance = original standard – revised standard
operation variance = revised standard – actual
Sales Mix Variance
Prod Actual sales @ Actual sales Difference Contribution Mix variance
budget mix per unit
A X X X $X $X
B X X X $X $X
X X $X
Sales Quantity Variance
Prod Actual sales @ Budgeted sales Difference Contribution Mix variance
budget mix per unit
A X X X $X $X
B X X X $X $X
X X $X
Percentage Change Calculation
(new figure-old figure)/old figure * 100
Change in figure/old figure * 100
Contribution
contribution = selling price – variable costs
contribution ratio = contribution per unit/selling price
Break Even
break even units = total fixed costs/contribution per unit
break even revenue = total fixed costs/contribution ratio
Margin of Safety
units = total budgeted sales – break-even point
% of budgeted sales = (total budgeted sales – break-even point)/total budgeted sales
Throughput accounting ratio (TAR)
Return per factory hour = throughput / product’s time on bottleneck resource
Cost per factory hour = total factory cost / total time on bottleneck resource
TAR = return per bottleneck hour / operating expense per bottleneck hour
actual revenue – (actual units sold * std selling price) = sales price variance
(actual units sold * std margin per unit) – (budgeted units sold * std margin per unit) = sales volume variance
Note std margin will be std profit if using absorption costing * std contribution if using marginal costing
Material Variances
(std qty * std price) – (actual quantity * std price) = usage variance
(actual quantity * std price) – (actual quantity * actual price) = price variance
Labour Variances
(std hrs * std rate) – (actual hrs * std rate) = efficiency variance
(actual hrs * std rate) – (actual hrs * actual rate) = rate variance
Note these assume no idle time
Idle Time Variance
(actual hrs worked * std rate per hr) – (actual hrs paid * std rate per hr) = idle time variance
Variance Overhead Variances
(std hrs worked * std rate) – (actual hrs worked * std rate) = efficiency variance
(actual hrs worked * std rate) – (actual hrs worked * actual rate) = expenditure variance
Fixed Overhead Variances
budgeted fixed prod overhead – actual fixed prod overhead = expenditure variance
(actual prod units – budgeted prod units) * std fixed overhead cost per unit = volume variance
(actual hours * FOAR per hr) – budgeted expenditure = fixed overhead capacity variance
(std hrs for actual prod * FOAR per hr) – (actual hrs * FOAR per hr) = fixed overhead efficiency variance
Planning Variances
planning variance = original standard – revised standard
operation variance = revised standard – actual
Sales Mix Variance
Prod Actual sales @ Actual sales Difference Contribution Mix variance
budget mix per unit
A X X X $X $X
B X X X $X $X
X X $X
Sales Quantity Variance
Prod Actual sales @ Budgeted sales Difference Contribution Mix variance
budget mix per unit
A X X X $X $X
B X X X $X $X
X X $X
Percentage Change Calculation
(new figure-old figure)/old figure * 100
Change in figure/old figure * 100
Contribution
contribution = selling price – variable costs
contribution ratio = contribution per unit/selling price
Break Even
break even units = total fixed costs/contribution per unit
break even revenue = total fixed costs/contribution ratio
Margin of Safety
units = total budgeted sales – break-even point
% of budgeted sales = (total budgeted sales – break-even point)/total budgeted sales
Throughput accounting ratio (TAR)
Return per factory hour = throughput / product’s time on bottleneck resource
Cost per factory hour = total factory cost / total time on bottleneck resource
TAR = return per bottleneck hour / operating expense per bottleneck hour
