Unit 7 - Standard Costing & Variance Analysis Cartes | Quizlet

What does 'Standard' mean?

It is another word for budget - what we thought it would be (NOT the 'actual' results)

What does 'Variance' mean?

The difference between the standard & the actual

What does it mean when a variance is favourable?

The actual is higher than the standard

What does it mean when a variance is adverse?

The actual is lower than the standard

How to calculate budgeted contribution (1)

Budgeted production x Contribution per unit

How to calculate budgeted contribution (2)

Budgeted production x (Selling price - Total cost)

How to calculate standard contribution on actual production (1)

Actual production x Contribution per unit

How to calculate standard contribution on actual production (2)

Actual production x (Selling price - Total cost)

How to calculate actual contribution

Actual sales revenue - Total actual costs

How to calculate sales volume variance

(Actual output - Budgeted output) x Standard contribution per unit

How to calculate sales price variance

Actual revenue - (Actual units x Standard selling price)

How to plot the material price and usage variances on a table

Have (Actual quantity x Actual price) on the first row, then Material price variance on the second row, then (Actual quantity x Standard price) on the second row, then Material usage variance on the next row then (Actual units x Standard quantity x Standard price), then the last variance at the bottom

What is the material price variance?

The difference between (Actual quantity x Actual price) and (Actual quantity x Standard price)

What if the material price variance is favourable?

Production is cheaper, but this doesn't mean it will be benefitical as it may decrease quality (giving you an adverse material usage variance)

What is the material usage variance?

The difference between (Actual quantity x Standard price) and (Standard quantity x Standard price)

What is the last variance on a material price & usage variances table?

The difference between the material price variance & the material usage variance

How to plot the labour rate and efficiency variances on a table

Have (Actual hours x Actual wage rate) on the first row, then Rate variance on the second row, then (Actual hours x Standard wage rate) on the second row, then Efficiency variance on the next row then (Actual units x Standard hours x Standard wage rate), then the last variance at the bottom

What is the labour rate variance?

The difference between (Actual hours x Actual wage rate) and (Actual hours x Standard wage rate)

What if the labour rate variance is favourable?

Hours are cheaper, but this doesn't mean it will be benefitical as it may decrease quality (giving you an adverse labour efficiency variance)

What is the labour efficiency variance?

The difference between (Actual hours x Standard wage rate) and (Standard hours x Standard wage rate)

What is the last variance on a labour rate & efficency variances table?

The difference between the labour rate variance & the labour efficiency variance

The structure of a variance report

Have 3 columns - State the Budgeted total contribution, Sales volume variance and Standard total contribution on the 3rd column as these are just from your previous answers. Then, in a new section, state your Material price & Material Usage variances in the 2nd column with that last variance on the 3rd column next to Material usage. Then, in a new section, state your Labour price & Labour Usage variances in the 2nd column with that last variance on the 3rd column next to Labour efficiency. Under it (in the same section), state your actual total contribution in the 3rd column