Formulae on Standard Costing

Material Cost Variance Material cost variance = (AQ x AP) – (SQ x SP) w h e r e AQ = Actual quantity AP = Actual price SQ = Sta Stand ndar ard d qua quant ntit ity y for for the the act actua uall out outpu putt SP = Standard price Materials Usage Variance Materials quantity variance = (Actual quantity – Standard quantity) x Standard price Materials Price Variance Materials price variance = (Actual price – Standard price) x Actual quantity Materials Mix Variance Materials mix variance = (Actual mix – Revised standard mix of actual input) x Standard price Revised standard proportion is calculated as follows:

Standard mix of a particular material Total standard quantity

x Actual input

Materials Yield Variance Yield variance = (Actual yield – Standard yield specified) x Standard cost per unit OR  Yield variance = (Actual loss – Standard loss on actual input) x Standard cost per unit Labour Cost Variance Labour cost variance = (AH x AR – SH x SR) w h e r e AH = Actual hours AR = Actual rate SH = Standard hours SR = Standard rate Labour Efficiency Variance Labour efficiency variance = (Actual hours – Standard hours for the actual output) x Std. rate per hour. Labour Rate Variance Labour rate variance = (Actual rate – Standard rate) x Actual hours Labour Mix Variance Labour mix variance = (Actual labour mix – Revised standard labour mix in terms of actual total hours) x Standard rate per hour  Labour Yield Variance Labour yield variance = (Actual loss – Standard loss on actual hours) x Average standard labour  rate per unit of output

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Total Overhead Cost Variance (Actual overhead incurred – Standard hours for the actual output x Standard overhead rate per hour) OR  (Actual overhead incurred – Actual output x Standard overhead rate per unit) Variable Overhead Variance (Actual overhead cost – Actual output x Variable overhead rate per unit) OR  (Actual overhead cost – Standard hours for actual output x Standard variable overhead rate per hour) Fixed Overhead Variance (Fixed overhead variance = Actual overhead cost – Fixed overhead absorbed) OR  (Actual overhead cost – Standard hours for actual output x Standard fixed overhead rate per hour) Variable Overhead Expenditure (Spending or Budget) Variance (Actual variable overhead – Budgeted variable overhead) Variable Overhead Efficiency Variance (Actual hours – Standard hours for actual output x Standard variable overhead rate per hour) Fixed Overhead Expenditure (Spending or Budget) Variance (Actual fixed overhead – Budgeted fixed overhead) Fixed Overhead Volume Variance (Budgeted overhead applied to actual output – Budgeted fixed overhead based on standard hours allowed for actual output) OR 

(Actual production – Budgeted production) x Standard fixed overhead rate per unit Fixed Overhead Efficiency Variance Fixed overhead efficiency variance = (Actual h ours – Standard hours for actual production) x Standard fixed overhead rate per hour  OR  Fixed overhead efficiency variance = (Actual p roduction – Standard production as per actual time available) x Standard fixed overhead rate per unit Fixed Overhead Capacity Variance Capacity variance = (Actual capacity hours – Budgeted capacity hours) x Standard fixed overhead rate  per hour  Sales Value Variance Sales value variance = (Actual value of sales – Budgeted value of sales) Actual sales = Actual quantity sold x Actual selling price Budgeted sales = Standard quantity x Standard selling price

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OR  Sales value variance = (Actual quantity x Actual selling price) – (Standard quantity x Standard selling  price) Sales Price Variance Sales price variance = (Actual selling price – Budgeted selling price) x Actual quantity

Sales Volume Variance Sales volume variance = (Actual quantity – Budgeted quantity) x Budgeted selling price

Sales Mix Variance Sales mix variance = (Actual mix quantity sold – Actual quantity in standard proportion) x Standard selling price

Sales mix variance = (Budgeted Price per unit u nit of actual mix – Budgeted price per unit of budgeted mix) x Total actual quantity Sales Quantity Variance Sales quantity variance = (Total actual quantity – Total budgeted quantity) x Budgeted price per unit of   budgeted mix

Total Sales Margin Variance Total sales margin variance = Actual profit – Budgeted profit

Sales Margin Price Variance Sales margin price variance = (Actual margin per u nit – Budgeted margin per unit) u nit) x Actual quantity

Sales Margin Volume Variance Sales margin volume variance = (Actual quantity – Bu dgeted quantity) x Budgeted margin per unit

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