The following points highlight the four major types of variance analysis. The types are: 1. Material Variances 2. Labour Variances 3. Variable Overhead Variances 4. Sales Variances. Variance Analysis: Type # 1. Material Variances: Some Definitions: 1. Direct Materials Usage Variance: "The difference between the standard quantity specified for actual production and the actual quantity used at standard purchase price." [...]
Learn about the difference between difference between Standard Cost and Historical Cost. The meaning of 'Standard Cost' will be more illuminating to us if a line of distinction is drawn between 'Standard Cost' and 'Historical Cost'. The following are the points of distinction: (i) Recording: Standard Cost is determined and recorded before actual performance while Historical Cost is related to [...]
Learn about the comparison between Standard Cost and Estimated Costs. Difference between Standard Cost and Estimated Cost (i) Objective: Estimated costs are intended to ascertain what the costs will be while standard costs aim at what costs should be. (ii) Calculation: Estimated costs are calculated on the basis of past performance being adjusted in the light of anticipated changes in [...]