Standard Costing - Direct Costs Chapter 3 Flashcards
Total direct material variance?
Standard cost of material for actual production - Actual cost of material for actual production
Material sub-variances to total the total direct material variance?
1) Direct material price variance
2) Direct material usage variance
Direct material price variance
Standard/expected COST of actual quantity of material used - Actual COST of the actual quantity used
Direct material usage variance?
The standard QUANTITY of material for actual production at standard price - Actual QUANTITY of material used at standard price
What are direct labour variances?
Differences between standard labour costs and actual labour costs
Direct labour variances help in analyzing cost efficiency in production.
What is the formula for Direct Labour Rate Variance?
Standard cost of actual labour hours used minus actual cost of labour hours used
This variance measures the impact of the labour rate paid.
What are the two sub-variances of direct labour variances?
- Direct labour rate variance
- Direct labour efficiency variance
These sub-variances provide insights into cost differences due to rate and time.
What does the Direct Labour Efficiency Variance measure?
Difference in cost due to the labor time used
It evaluates how effectively labour hours are utilized in production.
Fill in the blank: Direct Labour Rate Variance = (cost per _______) - (actual cost of the actual labour hours used).
unit
This formula helps in calculating the rate variance for labour.
What is the calculation for Direct Labour Efficiency Variance?
Standard/Expected labour hours for actual production at standard rate minus actual labour hours used at standard rate
This variance assesses the efficiency of labour usage.
True or False: The direct labour rate variance focuses on the difference in cost due to the labor time used.
False
The direct labour rate variance focuses on the rate paid, while efficiency variance focuses on the time used.
What does the term ‘standard cost of labour’ refer to?
The predetermined cost assigned to labour per unit of production
This cost is used for variance analysis.
Total direct labour variance
The standard cost of labour for the actual production level - The actual cost of labour for the actual production level
Direst labour rate variance
The standard COST of the actual HOURS used - The actual COST of the actual HOURS used
Direct labour efficiency variance?
Expected hours at standard rate - Actual labour hours used at standard rate
