Administration Cost Variance is the difference between the administration overheads budgeted for in an accounting period and those actually incurred. This variance helps in evaluating and controlling administrative costs in an organization.
Variance analysis in standard costing and budgetary control examining sub-variances to understand the causes of differences between budgeted and actual figures in financial performance.
Budgetary control is the process through which financial control is exercised within an organization by preparing budgets for income and expenditure in advance, comparing them with actual performance, and taking necessary actions on variances.
In standard costing or budgetary control, a controllable variance is a variance regarded as controllable by the manager responsible for that area of an organization. The variance occurs as a result of the difference between the budget cost allowance and the actual cost incurred for the period.
Cost control refers to the techniques used by various levels of management within an organization to ensure that costs incurred fall within acceptable levels. It involves the provision of financial information to management by the accountant and the use of various techniques such as budgetary control and standard costing to highlight and analyze any variances.
Direct Labour Efficiency Variance is an essential component in a standard costing system that evaluates the efficiency of labour in completing a given task. It compares the actual labour hours used to the standard hours expected and calculates the variance in cost using the standard direct labour rate.
An accounting term used in standard costing to measure the difference between the actual cost of direct materials and the standard cost, identifying favorable or adverse variances that affect budgeted profit.
Direct Materials Quantity Variance measures the efficiency of material usage by comparing the actual quantity used to the standard quantity expected for the output achieved.
Direct Materials Usage Variance is a key metric in standard costing systems, evaluating the difference between the actual and standard quantities of materials used in production.
In various professional fields, a discrepancy refers to the deviation between what is expected and what actually occurs, or the disagreement between conclusions of multiple parties regarding the same matter.
Expenditure variance measures the difference between actual spending and budgeted spending. This metric can help businesses understand financial discrepancies, control costs, and improve budgeting processes.
In standard costing and budgetary control, a favourable variance is any difference between the actual and budgeted performance of an organization where this creates an addition to the budgeted profit. For example, a favourable variance may occur if the actual sales revenue is greater than that budgeted or if actual costs are less than budgeted costs.
In a system of standard costing, the fixed overhead total variance represents the difference between the standard fixed overhead absorbed for the actual units produced and the actual fixed overhead expenditure incurred.
A flexible budget adjusts budgeted income and expenditure based on changing circumstances and actual activity levels, allowing for a more accurate financial planning and performance measurement.
Explores the concept of idle capacity variance, a key metric in understanding the efficiency and utilization of resources in manufacturing and service settings.
Marketing Cost Variance refers to the difference between the budgeted marketing costs and the actual marketing costs incurred during a specific period. This metric helps evaluate the efficiency of marketing expenditure and can be either favorable or unfavorable.
Mix variances are a set of accounting metrics that assess the financial impact of differences between actual and standard input combinations used in production or sales. These measures help identify inefficiencies or deviations that may affect profitability.
A detailed analysis of operational variance within the framework of standard costing, highlighting how it accounts for the difference between adjusted current standards and actual performance.
The Overhead Efficiency Variance measures the difference between the standard overhead cost allocated based on standard hours and the actual overhead cost incurred based on actual hours worked.
Planning variance refers to the difference between what was originally planned and what was actually achieved in a project or financial projection. It often serves as an indicator of the effectiveness of the planning process and helps identify areas for improvement.
Price variance is a common term in cost accounting that represents the difference between the actual cost of acquiring an asset or service and the budgeted or standard cost. It highlights whether an organization is paying more or less than previously anticipated for a particular expense.
Production Cost Variance in standard costing measures the difference between standard costs and actual costs for production. Understanding this variance helps in identifying efficiency levels and cost management effectiveness.
Productivity variance measures the differences between expected and actual output levels and efficiency, helping businesses refine production processes.
In standard costing, a revision variance, also known as a planning variance, measures the expected difference arising from the original standard and the modified standard due to changed circumstances. These variances help in understanding how accurately performance predictions align with actual outcomes.
In standard costing, the sales margin price variance arises due to the difference between actual sales revenue and the budgeted or standard selling prices for the actual sales quantities achieved. This variance can be either adverse or favorable.
Sales Margin Volume Variance, often referred to as Sales Volume Variance, in standard costing, measures the adverse or favorable variance arising from the difference between the actual number of units sold and those budgeted, valued at the standard profit margin.
An essential concept in managerial accounting, Sales Mix Profit Variance looks at the difference in actual profit compared to budgeted profit, considering the sales mix. It helps businesses understand the impact of variations in product sales mix on overall profitability.
Sales volume variance is the difference between the budgeted sales quantity and the actual sales quantity, valued at the standard profit per unit or standard contribution margin per unit. It measures the impact of sales volume fluctuation on the financial performance of a business.
Selling Price Variance is a financial metric that measures the difference between the actual selling price of a product and its budgeted or standard selling price, multiplied by the actual number of units sold.
Standard costing involves assigning a predetermined cost to products or services, which serves as a benchmark for measuring performance and cost control.
Standard costing is a cost accounting system that uses predetermined costs and income benchmarks for products and operations, comparing them with actual results to establish variances.
In standard costing, the standard cost derived from the standard quantity of materials allowed for the production of a product and the standard direct materials price for the materials specified for that product.
In standard costing, a predetermined price for direct materials used for establishing standard direct materials costs in order to provide a basis for comparison with the actual direct material prices paid.
Standard Marginal Costing involves the determination and control of predetermined standards for marginal costs and income that are used for products and operations, with periodic comparisons to actual outcomes to identify and analyze variances.
Two-Way ANOVA is a statistical test procedure that assesses the effect of two independent variables on a dependent variable by examining the interaction between these variables.
In a system of standard costing, the total difference arising between the standard variable overhead absorbed for the actual units produced and the actual variable overhead expenditure incurred. See also Overhead Total Variance.
Variance Analysis identifies the deviations in financial performance by analyzing the differences between planned financial outcomes and actual results, helping organizations make informed decisions and improve their operations.
