Revision Variance is the amount by which a budget is revised but which is not incorporated in the standard cost rate as a matter of policy. The standard costs may be affected by wage rate changes after wage accords, fiscal policy etc. The standard costs are not disturbed to account for these uncontrollable factors and to avoid the amount of … Read the rest
Variable overhead variance: Variable overheads vary directly with the volume of output and hence, the standard variable overheads very directly with the volume of output and hence, the standard variable overhead rate remains uniform. Therefore, computation of variable overhead variance, also known as variable overhead cost variance parallels the material and labour cost variances.
Thus, … Read the rest
Idle Time Variance – This variance is the standard cost of actual time paid to workers for which they have not worked due to abnormal reasons. The Reasons for idle time may be power failure, defect in machinery, and non supply of materials, etc. Idle time variance should be segregated from the labour efficiency variance otherwise it will show inefficiency … Read the rest
Labour Rate of Pay or Wage Rate Variance – It is that part of labour cost variance which arises due to a change in specified wage rate. Labour rate variance arises due to
- change in basic wage rate or piece-work rate,
- employing persons of different grades then specified,
- payment of more overtime than fixed earlier, (iv) new workers being paid