Why are product cost variances (DM, DL, MOH) broken down and separated into price & quantity variance or rate & efficiency variance. What is the purpose and what information do these additional variances provide? Explain in your own words and be specific.

Q: When using a standard cost system what term refers to the differences between actual and standard…

A: Difference of actual and standard cost is measured to calculate the variance. The variances of cost…

Q: b) Why are separate price and quantity variances computed?

A: Variances is a word used for finding out the difference between the actual and standard levels set…

Q: significant of variance analysis in cost management.

A: Variance analysis is a tool in cost management to compare and analyze variations in budgeted costs…

Q: I need help determining the price volume variance

A: The volume variance is the difference between actual and estimated volume. Price variance is the…

Q: explain activity variances and spending variances with example

A: Variance is defined as the difference between the actual and the budgeted or expected amount.…

Q: Explain direct labour efficiency variance.

A: Variance: Variance refers to the difference level in the actual cost incurred and standard cost. The…

Q: what is weighted average cost method?

A: The weighted average cost method is one of the methods to ascertain the unit cost of a product. It…

Q: Cite a specific example of the application of gross profit variance analysis. How will it help the…

A: Variance analysis for any variable enables the entity to break down the variable and establish…

Q: Question 4: Define the following:…

A: Variable cost refers to that cost which variate with the variations in the production or sales…

Q: Explain Measures of Variance and Risk?

A: Variance tests normal or normal variability. Variability is volatility for investors, and volatility…

Q: How is the fixed overhead volume variance different from the other variances?

A: Variance:  Variance refers to the difference level in the actual cost incurred and standard cost.…

Q: How do you find the standard quantity for efficiency variance?

A: Management should pay particular attention to those that are uncommon or noteworthy. Firms may…

Q: Define and explain the relationship between simple variance analysis and flexible variance analysis.

A: Simple variances analysis is the study of  deviations of the actual result against the forecasted…

Q: What does the concept of ‘management by exception’ mean and what factors are considered when…

A: Management by exception is a technique used in management information system.

Q: What is an example of a company and product that uses variance analysis

A: Companies use variance analysis to compare its actual cost with its budgeted cost or standards set…

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance. 

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.