COST ACCOUNTING
STANDARD COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Labor price variance = (Actual hours × Actual rate)-(Actual hours × Standard rate).
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Total overhead variance = Actual overhead-Overhead applied.
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Materials price variance = (Actual quantity × Actual price)-(Standard quantity × Standard price).
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Labor quantity variance = (Actual hours × Standard rate)-(Standard hours × Standard rate).
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Detailed explanation-1: -Vmp = (Actual Quantity Purchased * Actual Unit Cost)-(Actual Quantity Purchased * Standard Unit Cost). When the Actual Materials Price is higher than the Standard Materials Price, the variance is said to be unfavorable, since the Actual price paid on materials purchased is greater than the allowed standard.
Detailed explanation-2: -The formula for this variance is:(standard quantity of material allowed for production – actual quantity used) × standard price per unit of material.
Detailed explanation-3: -Price variance is the actual unit cost of a purchased item, minus its standard cost, multiplied by the quantity of actual units purchased.
Detailed explanation-4: -What is a Standard Cost Variance? A standard cost variance is the difference between a standard cost and an actual cost. This variance is used to monitor the costs incurred by a business, with management taking action when a material negative variance is incurred.