Variance analysis equations

Question 1

Overall materials variance

Answer 1

(standard quantity x standard price) - (actual quantity x actual price)

Question 2

Materials price sub-variance

Answer 2

actual quantity x (standard price per unit - actual price per unit)

Question 3

Materials usage sub-variance

Answer 3

standard price x (standard quantity - actual quantity)

Question 4

Overall labour variance

Answer 4

(standard hours x standard rate) - (actual hours x actual rate)

Question 5

Labour rate sub-variance

Answer 5

actual labour hours x (standard hourly rate - actual hourly rate)

Question 6

Labour efficiency sub-variance

Answer 6

standard rate x (standard hours - actual hours)

Question 7

Overall sales variance

Answer 7

(standard quantity x standard price) - (actual quantity x actual price)

Question 8

Sales price sub-variance

Answer 8

actual quantity x (standard selling price - actual selling price)

Question 9

Sales volume sub-variance

Answer 9

standard price x (standard quantity - actual quantity)