Variance Analysis Model

An analysis of the difference between Standard cost & Actual

Cost of price and quantity

Variance Analysis Model

Material Price Variance

(AQ x AP) (AQ x SP)

Variance Analysis Model

Material Quantity Variance

(AQ x SP) (SQ x SP)

Variance Analysis Model

Variance Analysis Model

Labor rate (Price) Variance

(AR x AH) (SR x AH)

Variance Analysis Model

Labor efficiency (Quantity) Variance

(AH x SR) (SH x SR)

Variance Analysis Model

Variance Analysis Model

Variable manufacturing overhead rate variance

VMRV = AH (AR - SR)

Variable manufacturing overhead efficiency

variance

VMEV = SR (AH - SH)

Variance Analysis Model

Hanson Inc. has the following variable
manufacturing overhead standard to
manufacture one Zippy:
1.5 standard hours per Zippy at
$3.00 per direct labor hour
Last week, 1,550 hours were worked to make
1,000 Zippies, and $5,115 was spent for
variable manufacturing overhead.

Variance Analysis Model

Hansons
Hansons rate
rate variance
variance (VMRV)
(VMRV) for
for
variable
variable manufacturing
manufacturing overhead
overhead for
for the
the
week
week was:
was:
a.
a. $465
$465 unfavorable.
unfavorable.
b.
b. $400
$400 favorable.
favorable.
c.
c. $335
$335 unfavorable.
unfavorable.
d.
d. $300
$300 favorable.
favorable.

Variance Analysis Model

Hansons
Hansons rate
rate variance
variance (VMRV)
(VMRV) for
for
variable
variable manufacturing
manufacturing overhead
overhead for
for the
the
week
week was:
was:
a.
a. $465
$465 unfavorable.
unfavorable.
b.
b. $400
$400 favorable.
favorable.
VMRV = AH(AR - SR)
c.
$335
unfavorable.
c. $335 unfavorable.
VMRV = 1,550 hrs($3.30 - $3.00)
d.
d. $300
$300 favorable.
favorable.VMRV = $465 unfavorable

Variance Analysis Model

Hansons
Hansons efficiency
efficiency variance
variance (VMEV)
(VMEV) for
for
variable
variable manufacturing
manufacturing overhead
overhead for
for the
the
week
week was:
was:
a.
a. $435
$435 unfavorable.
unfavorable.
b.
b. $435
$435 favorable.
favorable.
c.
c. $150
$150 unfavorable.
unfavorable.
d.
d. $150
$150 favorable.
favorable.

Variance Analysis Model

Hansons
Hansons efficiency
efficiency variance
variance (VMEV)
(VMEV) for
for
variable
variable manufacturing
manufacturing overhead
overhead for
for the
the
week
week was:
was:
1,000 units 1.5 hrs per unit
a.
a. $435
$435 unfavorable.
unfavorable.
b.
b. $435
$435 favorable.
favorable.
c.
c. $150
$150 unfavorable.
unfavorable.
d.
d. $150
$150 favorable.
favorable.
VMEV = SR(AH - SH)
VMEV = $3.00(1,550 hrs - 1,500 hrs)
VMEV = $150 unfavorable