Define Variance types and their components

Define variance types and their components.


a.) Material cost variance : It is the difference between the actual material cost and standard material cost. It is further divided into:

- Material Price Variance is the difference between standard price specified and actual price paid. Its components are:

a.) Actual Quantity
b.) Actual Price
c.) Standard Price

- Material Usage Variance is the difference between standard quantity specified and actual quantity used. Its components are:

a.) Standard Price
b.) Actual Quantity
c.) Standard Quantity

b.) Labour cost variances is the difference between standard wages specified and actual wages paid. It is further divided into:

- Wage Rate Variance: is the difference between standard pay of wages specified and actual wages paid. Its components are:

a.) Actual Hours
b.) Actual Rate
c.) Standard Rate

- Labour Efficiency Time Variance is the difference between standard labour hours specified and actual labour hours. Its components are:

a.) Standard Rate
b.) Actual Hours
c.) Standard Hours

c.) Overhead cost variance is the difference between standard overheads cost absorbed and actual overheads cost incurred. It is further divided into:

- Overheads Cost Variance - Its components are:

a.) Standard Hours for Actual Production
b.) Standard Hourly Rate
c.) Actual Overheads

- Expenditure Variance - Its components are:

a.) Revised Budgeted Overheads for Actual Hours
b.) Actual Overheads

- Efficiency Variance - Its components are:

a.) Standard Hourly Rate
b.) Standard Hours for Actual Production
c.) Actual Overheads
What is uniform costing? What is the scope of uniform costing?
Uniform costing is the application of the same accounting and costing principles, methods or procedures uniformly by various undertakings…
Why is uniform costing implemented?
Uniform costing method is implemented due to the following advantages:…
What are the pre-requisites for successful implementation of uniform costing?
The pre-requisites for successful implementation of uniform costing are as follows:..
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