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Variance Formulas

This document defines and explains various types of variances that can be used for analyzing manufacturing costs, sales and marketing performance, and project performance. It includes definitions for variances related to direct materials, direct labor, variable and fixed overhead, sales volume, sales mix, market size, market share, project costs and project schedules. It also outlines the basic components and calculation of cost of goods sold for manufacturing companies.

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KhurramIftikhar
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© © All Rights Reserved
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Download as DOC, PDF, TXT or read online on Scribd
30 views

Variance Formulas

This document defines and explains various types of variances that can be used for analyzing manufacturing costs, sales and marketing performance, and project performance. It includes definitions for variances related to direct materials, direct labor, variable and fixed overhead, sales volume, sales mix, market size, market share, project costs and project schedules. It also outlines the basic components and calculation of cost of goods sold for manufacturing companies.

Uploaded by

KhurramIftikhar
Copyright
© © All Rights Reserved
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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VARIANCE ANALYSIS

ANALYSIS OF MANUFACTURING COSTS


Sales volume variance = (flexible budget units - stati budget Units! " (budgeted #nt$ibuti#n %a$gin &e$ unit!
Flexible budget variance = Atual - Flexible 'udget
Static budget variance = Stati budget ( atual $esults
Direct Materials Eicienc! Variance = )standa$d *uantit+ f#$ atual #ut&ut ( atual *uantit+ f#$ atual #ut&ut, "
standa$d &$ie f#$ %ate$ials
Direct Materials "rice Variance # )standa$d &$ie ( atual &$ie, " *uantit+ &u$-ased
"rice variance = (Atual unit &$ie - Standa$d unit &$ie! " Atual units &u$-ased
F#$ lab#$. s#%eti%es alled rate variance$
Eicienc! variance = (In&uts atuall+ used - In&uts t-at s-#uld -a/e been used! " Standa$d unit &$ie #f in&uts
F#$ %ate$ials. s#%eti%es alled %uantit! variance #$ usage variance
Variable over&ead eicienc! variance = (atual units #f all#ati#n based used - units #f all#ati#n base t-at s-#uld
-a/e been used! " budgeted $ate &e$ unit #f all#ati#n base
Variable over&ead s'ending variance = Atual #st - (atual in&uts " budgeted $ate! =
(Flexible-budget /a$iane - effiien+ /a$iane!
Fixed over&ead s'ending variance = Flexible budget /a$iane f#$ fixed #/e$-ead = Atual #st - budgeted #st
Fixed over&ead 'roduction volume variance = (den#%inat#$ /#lu%e in units #f standa$d in&uts - units #f standa$d
in&uts all#0ed f#$ atual #ut&uts! " budgeted fixed #/e$-ead $ate &e$ unit #f standa$d in&uts
O R = (den#%inat#$ /#lu%e in &$#dut units - atual #ut&uts in &$#dut units! " budgeted fixed #/e$-ead $ate &e$
&$#dut unit
Als# alled ca'acit! variance. activit! variance( denominator variance( idle ca'acit! variance #$
volume variance
Direct material !ield variance = (atual units #f %ate$ial in&uts used - standa$d units #f %ate$ial in&uts all#0ed f#$
atual #ut&uts! " standa$d a/e$age &$ie &e$ unit #f %ate$ial in&uts
Direct materials mix variance = )(atual %ate$ial %ix &e$entage - standa$d %ate$ial %ix &e$entage! " atual t#tal
units #f %ate$ial in&uts used, " )standa$d indi/idual &$ie &e$ unit #f %ate$ials in&uts - standa$d a/e$age &$ie
&e$ unit #f %ate$ial in&uts,
Direct labor !ield variance = (atual units #f lab#$ in&uts used - standa$d units #f lab#$ in&uts all#0ed f#$ atual
#ut&uts! " standa$d a/e$age &$ie &e$ unit #f lab#$ in&uts
Direct labor mix variance = )(atual lab#$ %ix &e$entage - standa$d lab#$ %ix &e$entage! " atual t#tal units #f
lab#$ in&uts used, " )standa$d indi/idual &$ie &e$ unit #f lab#$ in&uts - standa$d a/e$age &$ie &e$ unit #f
lab#$ in&uts,
SAL1S AN2 MAR31TING 4ARIANC1S
Sales %uantit! variance = (Atual sales /#lu%e in units - stati budgeted sales /#lu%e #f indi/idual &$#dut in units!
" budgeted a/e$age #nt$ibuti#n %a$gin &e$ unit
Sales mix variance = )(Atual sales %ix &e$entage - budgeted sales %ix &e$entage! " atual t#tal sales /#lu%e #f all
&$#duts in units, " )budgeted indi/idual #nt$ibuti#n %a$gin &e$ unit - budgeted a/e$age #nt$ibuti#n %a$gin
&e$ unit,
Mar)et si*e variance = 'udgeted %a$5et s-a$e &e$entage " (Atual indust$+ sales /#lu%e in units - budgeted
indust$+ sales /#lu%e in units! " budgeted a/e$age #nt$ibuti#n %a$gin &e$ unit
Mar)et s&are variance = (atual %a$5et s-a$e &e$entage - budgeted %a$5et s-a$e &e$entage! " atual indust$+ sales
/#lu%e in units " budgeted a/e$age #nt$ibuti#n %a$gin &e$ unit
6RO71CT 4ARIANC1S8
"ro+ect cost variance = Atual #st #f 0#$5 &e$f#$%ed t# date - budgeted #st #f 0#$5 performed t# date
"ro+ect sc&edule variance = 'udgeted #st #f 0#$5 scheduled t# date - budgeted #st #f 0#$5 &e$f#$%ed t# date
Cost o goods sold , manuacturing
'eginning in/ent#$+ $a0 %ate$ials
9 6u$-ases #f $a0 %ate$ials
9 F$eig-t-in
= Ra0 %ate$ials a/ailable
1nding in/ent#$+ $a0 %ate$ials
= Ra0 %ate$ials used in &$#duti#n
9 2i$et lab#$
9 Fat#$+ #/e$-ead
= Manufatu$ing #sts
'eginning 0#$5-in-&$#ess in/ent#$+
9 Manufatu$ing #sts
1nding 0#$5-in-&$#ess in/ent#$+
= C#st #f g##ds %anufatu$ed
'eginning in/ent#$+ ( finis-ed g##ds
9 C#st #f g##ds %anufatu$ed
= G##ds a/ailable f#$ sale
1nding in/ent#$+ -- finis-ed g##ds
= C#st #f g##ds s#ld

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