Chapter 7 - Formulas to learn

Question 1

Total material variance

Answer 1

Should: Actual units should cost (Act units x std kg per unit x std £ per kg) X

Did: Actual material used did cost (X)

Question 2

Material price variance

Answer 2

Should: Actual purchases should cost (Act kg x std £ per kg) X

Did: Actual purchases did cost (X)

Question 3

Material usage variance

Answer 3

Should: Actual production should use (Act units x std kg per unit) X

Did: Actual production did use (X)

^Difference X std cost per kg X

Question 4

Total labour variance

Answer 4

Should: Actual units should cost (Act units x std hrs per unit x std £ per hour) x

Did: Actual labour used did cost (X)

Question 5

Labour rate variance

Answer 5

Should: Actual hours paid should cost (Act hrs paid x std £ per hour) X

Did: Actual hours paid did cost (X)

Question 6

Labour efficiency variance

Answer 6

Should: Actual production should take (Act units x std hrs per unit) X

Did: Actual production did take (X)

^Difference X std rate per hour X