Week 11 Standard costing formulas

Question 1

DM price variance equation

Answer 1

DM price variance =
(AQ * AP) - (AQ * SP)
- AQ stands for direct materials purchased

Question 2

DM quantity variance equation

Answer 2

DM quantity variance =
(AQ * SP) - (SQ * SP)
- AQ stands for direct materials used in production

Question 3

DM (SQ) equation

Answer 3

DM (SQ) =
standard quantity of DM per unit * # of units produced

Question 4

DL rate variance equation

Answer 4

DL rate variance =
(AH * AR) - (AH * SR)
- [(AH * AR) represents the actual cost of direct labor incurred]

Question 5

DL efficiency variance equation

Answer 5

DL efficiency variance =
(AH * SR) - (SH * SR)

Question 6

DL (SH) equation

Answer 6

DL (SH) =
standard hours of DL per unit * # of units produced

Question 7

Total DL variance equation

Answer 7

Total DL variance =
DL rate variance + DL efficiency variance

Question 8

VOVH spending variance equation

Answer 8

VOVH spending variance =
actual variable overhead costs - (AH * SR)

Question 9

VOVH efficiency variance equation

Answer 9

VOVH efficiency variance =
(AH * SR) - (SH * SR)

Question 10

VOVH (SH) equation

Answer 10

VOVH (SH) equation =
standard hours per unit * # of units produced

Question 11

Total VOVH variance equation

Answer 11

Total VOVH variance =
VOVH spend variance + VOVH efficiency variance