5.01 COST ACCOUNTING

Question 1

How do you calculate price variance?

Answer 1

(Standard price per unit - Actual price per unit) X Actual units purchased

Question 2

How do you calculate quantity variance?

Answer 2

(Actual quantity - Standard quantity) X Standard price

Question 3

How do you calculate labor usage variance?

Answer 3

(Standard hours allowed - Actual hours used) X Standard rate

**Standard hours allowed = production quantity X standard hours of labor per unit