# Standard Costing and Variance Analysis Formulas

Topics: Variance, Arithmetic mean, Expression Pages: 2 (397 words) Published: August 10, 2012
Standard Costing and Variance Analysis Formulas:
Learning Objective of the article:
1. Learn the formulas to calculate direct materials, direct labor and factory overhead variances. 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
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:
(Actual factory overhead) – (Budgeted allowance based on standard hours allowed*) Factory overhead volume variance:
(Budgeted allowance based on standard hours...