B1 Purpose and stages of standard costing Flashcards
Definition of Variance
A variance is the difference between actual costs and standard cost
Definition of stand cost
Standard costs refer to expected cost per unit
Meaning of Positive/Favourable variance
A better than expected result
Meaning of
Negative/unfavourable variance
A worse than expected result
Steps to be taken for variance
Identify the variance
Calculate the variance
Analyse and explain the variance
Attribute responsivity for the variance
Take action to correct the problem
What are the 4 types of variance
Sales variance
Materials variance
Labour variance
Overhead variance
What causes a Variance
-A price which is different from that planned
-A volume which is different from that planned
What is the purpose of variance analysis
The purpose of variance analysis is to separate out the two elements
