Variance and Budgeting Concepts

These flashcards cover key concepts related to variance, labor, materials, and budgeting.

Variance

The difference between an actual result and a budgeted performance.

Labor Rate Variance

The difference between the actual wage rates paid and the standard wage rates for the actual hours worked.

Favorable Variance

A variance that indicates actual performance is better than budgeted performance.

Unfavorable Variance

A variance that indicates actual performance is worse than budgeted performance.

Material Price Variance

The difference between the actual cost of materials and the standard cost, multiplied by the quantity purchased.

Material Quantity Variance

The difference between the actual quantity of materials used and the standard quantity allowed for the output, multiplied by the standard price.

Efficiency Variance

The difference between actual performance and the expected performance based on standard costs.

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours allowed for the actual output.

Direct Manufacturing Labor

Labor costs associated with the direct production of goods.

Flexible Budget

A budget that adjusts to changes in activity levels and provides a more accurate reflection of costs.