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What factors causes Budget Variance?
There are 7 variances associated with a budget ( which are generally calculated for controlling purposes) 1- Material Price variance 2- Material Quantity variance 3- Labor rate variance 4- Labor efficiency variance 5- Spending variance 6- Efficiency variance 7- Capacity variance
What is the definition of the idle time variance?
machine breakdown, non ability material, illness
What difference between a favorable variance and an unfavorable variance?
Favourable variance is that variance which is good for business while unfavourable variance is bad for business
What is Assumptions for Variance Homogeneous?
Equal in Variance
What is variance?
In most production management systems, a "Planned" quantity and material cost is calculated based on the associated Bill of Materials (BOM) and Operatons being performed (Route) creating labor and overhead related costs. The "Actual" quantities, material costs, and labor/overhead costs are issued to a Work in Process (WIP) account and the quantities/values of the produced items are recieved from the WIP account. A variance usually occurs when there is a difference between the issued material cost plus labor and overhead and the recieved material cost of the produced item. The reasons for these variances can be differences in planned vs actual quantities, differences in system or planned cost of materials, labor, or overhead vs actual cost, or any other potential reason for an unplanned difference.
What are the causes direct material quantity variance?
what are some of the causes of material quntity variance of favourable amount
What causes material usage variance?
Material usage variance can be caused due to waste. Quality issues, such as defects, can result in material usage variance.
Causes material quantity variance?
causes of labor rate variances
Causes of direct material quantity variance?
Some causes of direct material quantity variance are poor quality materials, untrained workers, and lack of supervision. Production managers should look at and determine the causes.
What factors causes Budget Variance?
There are 7 variances associated with a budget ( which are generally calculated for controlling purposes) 1- Material Price variance 2- Material Quantity variance 3- Labor rate variance 4- Labor efficiency variance 5- Spending variance 6- Efficiency variance 7- Capacity variance
Causes material usage variance?
may be material price is higher than the stander ed price
Example of calculating Sales Mix Variance?
SALES MIX VARIANCE= standard sales-revised std sales
How do you calculate material price variances and what are the possible reasons for such variances?
Following are the causes of material price variance: 1.There could have been recent changes in purchase price of materials. 2.Price variance can be due to substituting raw materials different from the original material specification. 3.Price variance can be attributed to the non availability of cash discounts which was originally anticipated at the time of setting the price standards. 4.Changes in transportation costs and storekeeping costs can also be contributing factors to material price variance.
What causes a volume variance?
a + or a-
What is the meaning of analysis of covariance?
A mix of linear regression and analysis of variance. analysis of covariance is responsible for intergroup variance when analysis of variance is performed.
What is material cost variance?
The material cost variance denoting the difference between the standard cost of materials and actual cost of matrials. The material cost variance is between the standard material cost for actual production in units and actual cost. The total cost is usually determined by two differenct factors of influence viz quantity of materials utilized/ required and price of the materials. The fluctuations in the material cost are only due to the fluctuations in the utility of materials due to many factors. Material cost variance can be computed into two different ways: DIRECT METHOD AND INDIRECT METHOD material cost variance= Standard cost of materials for actual output- actual cost of raw materials. MCV=(S Q AO X SP)-(AQ X AP) Indirect Method: material cost variance= Material price variance (MPV)+Material usage Variance
What causes a DM Price Variance?
There are a number of reasons for causinf DM Price Variance. Adverse Price Variance 1) Demand > Supply (Low Supply, High Demand result in price to be material purchase to be more costly) 2) Change to a higher grade material quality. 3) Purchases made from oversea, exchange rate incurred 4) Purchases made in smaller quantity As for favourable DM price variance, explanation will be opposite of the above given.
