tips on remembering variances

iainiow

Hi Ya,

im TRYING to revise the plethora of different variance analysis between standard and actual costs.

these include all of the materials, labour and fixed cost variance calculations. I have written them all down countless times, done question after question, but i cant get them to stay in the noggin!!

they all all tantelisingly similar, but are different enough to make it impossible for me to remember.

Any one got any helpful tips on how they managed to remember them??? many thanks

:thumbup1:

Barbara Knight

Hi there,

As the variances are all the something cost of something - the something cost of something else - if you know what I mean, there are 4 things to remember for each variance - I am using acronyms to remember what stays the same on both rows and then I can fill in the blanks:

I am using acronyms - as follows:

Materials variances = PAUS
P rice variances - A ctuals stay the same
U se variance - S tandard costs

Labour variances = RAES
Rate variance - Actuals stay the same
Efficiency variance - standard costs

If you write down the bit from the acronym you can then more easily remember the other bits and fill them in - thats how I am doing it.

Overhead variances are slightly different but I am going for an acronym for each OH variance - an example is EPA
E fficiency variance is p lanned hours - a ctual hours

and volume capacity varaince = VCAB
V olume C apacity variance is OAR X ( A ctual hours - B udgeted hours)

I don't know if this will help you, but having tried various grids and logical thinking as recommended by lots of people, I found that I needed simple acronyms I could write look at just as I was going into the exam and then write down as soon as I get in then I don't have to flap about remembering them.

Everyone is different and I would say keep plugging away and checking out the forums until you find something that works for you.

All the best
Barbara:thumbup1:

pablod

Hi,

My tutor taught us a way, (dont know if it is his own personal way or a method used by other colleges).

Fixed Material Variance

Actual Units x Actual Cost
Price Variance (Bottom less top calc)
Actual Units x Standard Cost
Usage Variance (Bottom less top calc)
Standard Units x Standard Cost


Fixed Labour Variance

Actual Hours x Actual Rate
Rate Variance(Bottom less top calc)
Actual Hours x Standard Rate
Efficiency Variance (Bottom less top calc)
Standard Hours of Actual Production x Standard Rate

Fixed Overhead Variance

Actual (Hours/units) x Actual Fixed O/head absorbtion rate
Expenditure Variance (Bottom less top calc)
Budgeted (Hours/units) x Standard Fixed O/head absorbtion rate
Capacity Variance (Bottom less top calc)
Volume Variance (Capacity minus Efficiency variance)
Actual (Hours/units) x Standard Fixed O/head absorbtion rate
Efficiency Variance (Bottom less top calc)
Standard (Hours/units) x Standard Fixed O/head absorbtion rate

Apparently, the variable overhead never gets examined, but is exactly the same working for the labour variance, with the variances labelled the same.

PS Im sorry if it appears squashed, it dosent really space it out properly. Give it a try and see where the calculations come from

Hope it helps
Paul

pablod

if you leave your email i will email you an excel template with all the variance set out

Paul