**STANDARD COSTING FORUMULAS**

**Key Points to be remembered while solving practical problems:**

**SR = Standard Rate (Given)**

**AR = Actual Rate (Given)**

**SQ = Standard Quantity (Based on Actual output = SQ*AY/SY)**

**AQ = Actual Quantity (Given)**

**RSQ = Revised Standard Quantity (SQ*Actual Input/Standard Input)**

**AY = Actual Yield (given)**

**SY = Standard Yield (Actual input – Standard loss)**

**Material Variance**

**1. Material Cost Variance (MCV) = SRXSQ – ARXAQ**

**2. Material Price Variance (MPV) = AQ (SR – AR)**

**3. Material Usage/Quantity Variance (MUV) = SR (SQ – AQ)**

**4. Material Mix Variance (MMV) = SR (RSQ – AQ)**

**5. Material Yield Variance (MYV) = SR (AY – SY)**

**Verification: MCV = MPV+MUV; MUV = MMV+MYV**

**Labour Variance**

**1. Labour Cost Variance (LCV) = SRXSH – ARXAH [Actual hours including Idle time]**

**2. Labour Rate of Pay Variance (LRPV) = AH (SR – AR)**

**3. Total Labour efficiency variance (TLEV) = SR (SH – AH) [Actual hours including idle time]**

**4. Labour Efficiency/Time Variance (LEV/LTV) = SR (SH – AH) [Actual Hours deducting idle time]**

**4. Labour Revised Efficiency Variance (LREV) = (SH – RSH) X Standard Rate**

**4. Labour Mix Variance (LMV) = SR (RSH – AH) [RSH is calculated in the same way as in the case of material]**

**5. Labour Yield Variance (LYV) = SR (AY – SY)**

**6. Labour Idle Time Variance = SR X Idle Hours**

__Key points in labour variance:__**1. Standard Gang Hours = Actual output/Standard output per gang hours**

**2. Actual data are always given.**

**3. Idle time may be normal or abnormal. It does not affect formula.**

**4. Verification: LCV = LRPV+LEV + Idle Time Variance. LEV = LMV+LREV**

**5. After TLEV, all calculations are made on the basis of actual hours worked.**

**6. In case of change in the percentage of skilled and unskilled labour, only standard is to be adjusted. Actual figures are given after all adjustments.**

**Overheads Variance**

**Fixed overhead variance**

**1. Fixed overhead cost variance = Fixed overhead recovered (AO*SR) – Actual fixed overhead (AO*AR)**

**2. Fixed overhead expenditure variance = Actual fixed overhead (AO*AR) – Budgeted fixed overheads (BO*BR)**

**3. Fixed overhead volume variance = Budgeted fixed overhead (BO*BR)– Fixed overhead recovered (AO*SR)**

**4. Fixed overhead Capacity variance = Budgeted fixed overhead (BO*BR) – Standard fixed overheads (SO*SR)**

**5. Idle time variance = Idle hours X standard fixed overhead rate per hour**

**6. Fixed overhead efficiency variance =Standard fixed overhead - Fixed Overhead recovered**

**7. Fixed Overhead Calendar variance = Excess/Deficit hours worked X Standard fixed overhead rate per hour**

**(Here, AO = Actual Output - Given; BO = Budgeted Output - Given; SO = Standard Output – Always Based on actual working days;)**

**Verification: Fixed overhead cost variance = Expenditure variance + volume variance**

**Fixed overhead volume variance = Capacity variance + efficiency variance + Idle time variance + calendar variance.**

**Variable overhead variance**

**1. Variable overhead cost variance = Variable overhead recovered (SO*SR) – Actual Variable overhead (AO*AR)**

**2. Fixed overhead expenditure variance = Actual fixed overhead (AO*AR) – Standard variable overheads (SO*BR)**

**3. Fixed overhead efficiency variance =Standard variable overhead - variable Overhead recovered**

**Activity Ratios**

**1.**

**Efficiency Ratio = Standard Hours/Actual hours x 100**

**2.**

**Activity Ratio = Standard Hours for Actual Work/Budgeted standard hours x 100**

**3.**

**Calendar Ratio = Available Working Days/Budgeted Working Days x 100**

**4.**

**Capacity Usage Ratio = Budgeted Hours/Maximum Possible Hours in Budget Period x 100**

**5.**

**Capacity Utilisation Ratio = Actual Hours/Budgeted Hours x 100**

**6.**

**Idle Time Ratio = Ideal Time Hours/Budgeted Hours x 10**

**Sales variance (On the basis of value and margin)**

**Sales Variance (On the basis of Value)**

**1. Sales Value Variance = (Actual Sales - Budgeted Sales)**

**2. Sales Price Variance = (Actual Price - Standard Price) x Actual unit sold.**

**3. Sales Volume Variance = (Actual Units - Budgeted Units) x Std. Price.**

**4. Sales Mix Variance = (Actual Units - Total Actual units in Std. Ratio) x Std. Price.**

**5. Sales Quantity Variance = (Total Actual units in Std. Ratio - Budgeted units) x Std. Price.**

**Sales variance (On the basis of margin when both sale price and cost is given)**

**1. Sales Margin / Profit / Variance = Actual Profit - Budgeted Profit.**

**2. Sales margin Price Variance = Actual units (Actual Profit – Budgeted Profit)**

**3. Sales Margin volume variance = (Actual quantity - Budgeted quantity) standard margin**

**4. Sales Margin mix variance = (Actual quantity - total quantity standard ratio) standard margin**

**5. Sales margin quantity variance = (Total qty. in Std Ratio - budgeted quantity) x Std. Margin**

**6. Market Share variance = (Actual sales units – budgeted share of actual market ) std margin p.u.**

**7. Market Size variance = (budgeted share of actual market – budgeted sales units) std margin p.u.**

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