Tuesday, April 22, 2008
This is my take on sales variance.
Sales Variance = Price Variance + Volume Variance
Price Variance = (Actual Margin * Actual Units) - (Standard Margin * Standard Units)
Actual Margin = Actual Selling Price - Standard Full Cost (Absorption Costing)
Standard Margin = Standard Selling Price - Standard Full Cost (Absorption Costing)
For Marginal Costing:
Actual Margin = Actual Selling Price - Total Variable Cost
Standard Margin = Standard Selling Price - Total Variable Cost
Operating Statement
Budget Profit -
Add/Less:
Sales Margin Variance
Price-
Volume-
Profit before Cost Variances-
Add/Less:
Cost Variances-
EG. Material Variance-
Labour Variance-
Actual Profit-
There are only two difference between Absorption Costing and Marginal Costing Variance Analysis.
1. Sales Volume Variance: AC use normal costing but MC use contribution margin.
2. Marginal Costing only report fixed overheads as expenditure variance.
Sales Variance = Price Variance + Volume Variance
Price Variance = (Actual Margin * Actual Units) - (Standard Margin * Standard Units)
Actual Margin = Actual Selling Price - Standard Full Cost (Absorption Costing)
Standard Margin = Standard Selling Price - Standard Full Cost (Absorption Costing)
For Marginal Costing:
Actual Margin = Actual Selling Price - Total Variable Cost
Standard Margin = Standard Selling Price - Total Variable Cost
Operating Statement
Budget Profit -
Add/Less:
Sales Margin Variance
Price-
Volume-
Profit before Cost Variances-
Add/Less:
Cost Variances-
EG. Material Variance-
Labour Variance-
Actual Profit-
There are only two difference between Absorption Costing and Marginal Costing Variance Analysis.
1. Sales Volume Variance: AC use normal costing but MC use contribution margin.
2. Marginal Costing only report fixed overheads as expenditure variance.
Labels: accountancy, accounting, management accountancy, managerial accounting, standard costing
what we could have been, 10:56 PM.
