Standard costing

FORMULAS:

1. Material Variances (AAS)

a. AQ x AP MPV - Material Price Variance

MQV - Material Quantity Variance
AQ – Actual Quantity
(a minus b) = Material Price Variance SQ – Standard Quantity
b. AQ x SP AP – Actual Price
SP – Standard Price
(b minus c) = Material Quantity Variance
c. SQ x SP Total Material Variance

MPV = AQ (AP – SP)

MQV = SP (AQ – SQ)
Total Material Variance = MPV + MQV

2. Labor Variances (AAS)

LRV – Labor Rate Variance
LEV - Labor Efficiency Variance
a. AH x AR AH – Actual Hours
SH – Standard Hours
AR – Actual Rate
(a minus b) = Labor Rate Variance
b. AH x SR SR – Standard Rate

(b minus c) = Labor Efficiency Variance

c. SH x SR Total Labor Variance

LRV = AH (AR – SR)

LEV = SR (AH – SH)
Total Labor Variance = LRV + LEV
3. Overhead Variances:

Variable
Spending
Spending Variance

Controllable
Variance < Fixed
Spending
Variance
Variance
< Variable Variable
Efficiency Efficiency
Total
Overhead
Variance
< Volume
Variance

Volume
Variance

Volume
Variance Variance Variance

Total Overhead Variance = AFOH – SFOH TOH – Total Overhead Variance

Controllable Variance = AFOH – BASH AFOH –Actual Factory Overhead
Volume Variance = BASH – SFOH SFOH – Standard Factory Overhead
Spending Variance = AFOH – BAAH BASH – Budgeted Allowed on Standard Hours
Variable Efficiency Variance = BAAH – BASH BAAH – Budgeted Allowed on Actual Hours
CV- Controllable Variance
VV- Volume Variance
SV –Spending Variance
VEV – Variable Efficiency Variance
Variable overhead variance (AAS)
VSV – Variable Spending Variance
FSV – Fixed Spending Variance
a. Actual Variable OH
Variable
(a – b) = Spending
b. AH x Variable OH rate Variance

(b – c) =
Variable Spending
c. SH x Variable OH rate
Efficiency Variance
Variance
Controllable
Fixed overhead variance (ABS)
Variance

a. Actual fixed OH Variable

Efficiency
Fixed
Variance Total
(a – b) = Spending Overhead
b. Budgeted fixed at Variance
Normal Capacity Variance

(b – c) = Volume Volume Volume

c. SH x Fixed OH rate Variance Variance Variance