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# Standard Costing and Variance Analysis Formulas:

This is a collection of variance formulas/equations which can help you calculate variances for direct materials, direct labor, and factory overhead.

1. Direct materials variances formulas
2. Direct labor variances formulas
3. Factory overhead variances formulas

## Direct Materials Variances:

Materials purchase price variance Formula:
Materials purchase price variance = (Actual quantity purchased × Actual price) – (Actual quantity purchased × Standard price)

Materials price usage variance formula:
Materials price usage variance = (Actual quantity used × Actual price) – (Actual quantity used × Standard price)

materials quantity/usage variance formula:
Materials price usage variance = (Actual quantity used × Standard price) – (Standard quantity allowed × Standard price)

Materials mix variance formula:
(Actual quantities at individual standard materials costs) –  (Actual quantities at weighted average of standard materials costs)

Materials yield variance formula:
(Actual quantities at weighted average of standard materials costs) –  (Actual output quantity at standard materials cost)

## Direct Labor Variances:

Direct labor rate/price variance formula:
(Actual hours worked × Actual rate) – (Actual hours worked × Standard rate)

Direct labor efficiency/usage/quantity formula:
(Actual hours worked × Standard rate) – (Standard hours allowed × Standard rate)

Direct labor yield variance formula:
(Standard hours allowed for expected output × Standard labor rate) – (Standard hours allowed for actual output × Standard labor rate)

## Factory Overhead Variances:

Factory overhead controllable variance formula:
(
Actual factory overhead) – (Budgeted allowance based on standard hours allowed
*)

Factory overhead volume variance:
(Budgeted allowance based on standard hours allowed*) – (Factory overhead applied or charged to production**)

Factory overhead spending variance:
(Actual factory overhead) – (Budgeted allowance based on actual hours worked***)

Factory overhead idle capacity variance formula:
(Budgeted allowance based on actual hours worked***) – (Actual hours worked × Standard overhead rate)

Factory overhead efficiency variance formula:
(Actual hours worked × Standard overhead rate) – (Standard hours allowed for expected output × Standard overhead rate)

Variable overhead efficiency variance formula:
(Actual hours worked × Standard variable overhead rate) – (Standard hours allowed × Standard variable overhead rate)

Variable overhead efficiency variance formula:
(Actual hours worked × Fixed overhead rate) – (Standard hours allowed × Fixed overhead rate)

Factory overhead yield variance formula:
(Standard hours allowed for expected output × Standard overhead rate) – (Standard hours allowed for actual output × Standard overhead rate)

*Fixed overhead budgeted + Standard hours allowed × Standard variable overhead rate

**Standard hours allowed for actual production × Standard overhead rate

***Fixed overhead budgeted + Actual hours worked × Standard variable overhead rate

## Relevant Articles:

 » Definition and Explanation of Standard Cost » Purposes and Advantages of Standard Costing System » Setting Standards » Materials Price Standard » Materials Price Variance » Materials Quantity Standard » Materials Quantity Variance » Direct Labor Rate Standard » Direct Labor Rate Variance » Direct Labor Efficiency Standard » Direct Labor Efficiency Variance » Factory Overhead Cost Standards » Overall or Net Factory Overhead Variance » Overhead Controllable Variance » Overhead Volume Variance » Overhead Spending Variance » Overhead Idle Capacity Variance » Overhead Efficiency Variance » Variable Overhead Efficiency Variance » Fixed Overhead Efficiency Variance » Mix and Yield Variance » Variance Analysis Example » Standard Costing and Variance Analysis Formulas » Management by Exception and Variance Analysis » International Uses of Standard Costing System » Advantages, Disadvantages, and Limitations of Standard Costing

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