standard costing

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Variance analysis – meaning

Variance analysis is the process of computing the amount of and isolating the cause of variance between actual cost or revenue and standard cost and revenue.



Variance analysis involves the computation of individual variance and determination of causes of each variance.  

The purpose of variance analysis is to enable management to improve operations, increase … Read the rest

7 limitations of standard costing

7 limitations of standard costing.

Standard costing is a managerial control technique that facilitates a comparison of standard cost and revenue with actual results to obtain variance that is used to stimulate improved performance.  

The following are limitation of standard costing:

  • The standard costing system assumes that performance to standard is acceptable. Today’s business environment is more focused on continuous improvement
  • Standard costing was
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Standard costing and variance analysis revision question (NBAA, B5,NOV 2018)

Rorya Cakes Bakery makes a single product called Delicious Cakes. The company is using marginal costing to value its product. The company standard cost card for Delicious Cakes comes from the parent company called Rorya Oven headquartered in Malaysia, which contains the following:

Direct Material:                                                                                        TZS

Ingredient A:                            (2 kg @ TZS.1,500)                        3,000

Ingredient B:                            (1.5 litres @ TZS.1,200)               … Read the rest

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Meaning of attainable standards in management accounting.

Attainable standards also are known as expected or practical standards is a standard which can be attained if a standard unit of work is carried out efficiently, a machine properly operated or materials properly used. This standard is most widely used in practice. The attainable standard is based on an efficient operating condition though not a perfect condition.

This standardRead the rest

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direct material variance – meaning and formula

Direct material variances are also known as material cost variances. The material cost variance is the difference between the standard cost of materials that should have been incurred for manufacturing the actual output and the cost of materials that have been actually incurred. Material Cost Variance consists of:



  • Material Price Variance and
  • Material Usage Variance:
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Variance analysis – meaning

Variance analysis is the process of computing the amount of and isolating the cause of variance between actual cost or revenue and standard cost and revenue.

Variance analysis involves the computation of individual variance and determination of causes of each variance

The purpose of variance analysis is to enable management to improve operations, increase efficiency, utilize resources more effectively and … Read the rest