Variance analysis of costs is performed by comparing actual costs and budgeted costs. •Standard direct materials cost is the product of the ... –The variable overhead spending variance (also called the variable overhead rate variance) is computed by ... difference between the standard direct labor hours allowed for good units produced and the actual hours Direct materials cost is the sum of all direct materials costs incurred during the accounting period. The direct material variance is comprised of two other variances, which are: Purchase price variance.This is the difference between the standard and actual cost per unit of the direct materials purchased, multiplied by the standard … Direct costs can be fixed costs such as the rent for a production plant. With sufficient data, the variance may be split into price variance and quantity variance.In production departments, variance analysis may be done for different cost components, i.e. To calculate direct materials, add beginning direct materials to direct materials purchases and subtract ending direct materials. The counseling program manager’s salary and related fringe benefits benefit direct programs but some of that time is program administration, which is considered administrative costs even though it is a direct cost to the program. standard costs assigned: direct materials standard cost (405,000 units @ $2.00/unit) $ 810,000 actual costs: direct materials costs incurred (403,750 units @ $2.20/unit) $ 888,250

Any balance in a variance account indicates that the company is deviating from the amounts in its profit plan. The cost behavior for variable factory overhead is not unlike direct material and direct labor, and the variance analysis is quite similar. The expected amount is usually the standard quantity of direct materials, direct labor, machine usage time, and so forth that is assigned to a product.However, the efficiency variance can also be applied to services. The total direct materials variance equals the difference between total actual cost of materials (AP x AQ) and the budgeted cost of materials, based on standard costs (SP x SQ): Total direct materials variance = (SP x SQ) – (AP x AQ) For example, Band Book’s standard price is $10.35 per pound. For purposes of inventory calculation, the direct materials account includes the cost of materials used rather than materials purchased. Shared direct costs – The cost of the gym rental would be a direct cost that is shared among the two new programs. The direct material variance is the difference between the standard cost of materials resulting from production activities and the actual costs incurred. The goal will be to account for the total “actual” variable overhead by applying: (1) the “standard” amount to work in process and (2) the “difference… An adverse material price variance indicates higher purchase costs incurred during the period compared with the standard. direct materials, direct labor, and factory overhead. The differences between the standard costs and the actual manufacturing costs are referred to as cost variances and will be recorded in separate variance accounts.

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