Learning Activity 6.2: Variance Analysis
Introduction and Purpose of Assignment
Variance analysis provides a business with information to compare standardized figures to the actual costs.
Objectives
· Evaluate the operating budget through the use of variance calculations. (6.1)
Theory and Context
Variances are used to compare budgeted figures as well as individual aspects of the price of a product. Variances are calculated for direct materials price, direct materials quantity, total direct materials, direct labor rate, direct labor efficiency, total labor costs, variable overhead spending, variable overhead efficiency, total overhead, fixed overhead budget, fixed overhead volume, and total fixed overhead costs.
Resources
Variance Analysis.xlsx located in the Course Documents in e360.
Finance & Accounting Videos by Prof Coram. (2017, April 21). Standard costs and variances. [Video file]. Retrieved from https:
www.youtube.com/watch?v=qlMrQxANluU&list=PLnxFTRWqUJUsFTETVu-O5vP5Y2S2QE3gf&index=1
Edspira. (2014, December 23). Standard costs and variance analysis [Video file]. Retrieved from https:
www.youtube.com/watch?v=yWOdzhjHNSM
Instructions
Complete the spreadsheet on Variance Analysis