Chat with our AI personalities
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
Efficiency Varian materials and direct labor, the variances were recorded in specific general ledger accounts.
Price Variance
The price variance might result from use of cheaper but inferior quality materials hence though it will be cheaper , the final product will be compromised .
Favourable variance is that variance which is good for business while unfavourable variance is bad for business