Managerial Accounting- Variances Review

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Variable Overhead Efficiency Variance Formula:

(Actual Hours- Standard Hours) * Standard Ovh. Rate

Labor Efficiency Variance Formula:

(Actual Hours- Standard Hours) * Standard Rate

Variable Overhead Spending Variance Formula:

(Actual Ovh. Rate- Standard Ovh. Rate) * Actual Hours

Material Price Variance Formula:

(Actual Price- Standard Price) * Actual Quantity

Labor Rate Variance Formula:

(Actual Rate- Standard Rate) * Actual Hours Worked

Material Quantity Variance Formula:

(Actual Usage- Standard Usage) * Standard Cost

Standard Quantity Allowed

The standard quantity allowed is computed with this formula: (Actual Output * Standard Allowed)

Labor Efficiency Variance

The Labor Efficiency Variance is the difference in the actual hours used to produce something and the standard amount that should have been used multiplied by the standard labor rate.

Labor Rate Variance

The Labor Rate Variance is the difference between the actual and the expected cost of labor multiplied by the actual amount of hours worked.

Material Price Variance

The Material Price Variance is the difference between the actual and the budgeted cost for materials multiplied by the actual quantity used.

Material Quantity Variance

The Material Quantity Variance is the difference between the actual amount of materials used and the amount of materials expected to be used multiplied by the standard cost.

Variable Overhead Efficiency Variance

The Variable Overhead Efficiency Variance is the difference between the actual hours worked and the budgeted hours worked multiplied by the standard overhead rate.

Variable Overhead Spending Variance

The Variable Overhead Spending Variance is the difference between the actual and the budgeted rates of variable overhead multiplied by actual hours.


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