Variance Anlysis

Question 1

Formula for standard direct cost:

Answer 1

Standard price X standard quantity

Question 2

Formula for standard indirect costs:

Answer 2

Standard application rate X standard quantity

Question 3

Formula for direct materials price variance:

Answer 3

Actual quantity purchased X (actual price - std. price)

Question 4

Formula for direct material quantity usage variance:

Answer 4

Std. Price X (actual quantity used - std. quantity allowed)

Question 5

Formula for direct labor rate variance:

Answer 5

Actual hours worked X (actual rate - std. rate)

Question 6

Formula for direct labor efficiency variance:

Answer 6

Std. Rate X (actual hours worked - std. hours allowed)

Question 7

Formula for variable overhead spending variance:

Answer 7

Actual hours X (actual rate - std. rate)

Question 8

Formula for variable overhead efficiency variance:

Answer 8

Std. Rate X (actual hours - std. hours)

Question 9

Formula for fixed overhead spending variance:

Answer 9

Actual fixed overhead - budgeted fixed overhead

Question 10

Formula for fixed overhead volume variance:

Answer 10

Budgeted fixed overhead - (std. rate X actual production)

Question 11

Oveapplied overhead (more credits) is favorable as it will:

Answer 11

Credit cost of goods sold and reduce expenses.

Question 12

Formula for sales price variance is:

Answer 12

[(Actual SP / unit) - (budgeted SP / unit)] X actual units sold

Question 13

Formula for sales volume variance is:

Answer 13

(Actual units sold - budgeted units sold) X std. contribution margin per unit