With reference to cost management, explain following Material variance, fixed overhead variance, Variable overhead variance, Labor variance and Sales variance
Material Variance
For the purpose of calculating the material variance the following two types of standard need to be fixed:
(a) Material Price Standard;
(b) Material Quantity Standards.
The Material variance is classified as follows:
(i) Material Cost Variance: The material cost variance is also called material total variance and is the difference between the standard cost of material and actual cost of material used.
Material Cost Variance = (Standard unit × Standard price) –(Actual unit × Actual price)
(ii) Material Price Variance: A material price variance occurs when raw material is purchased at a price different from standard price.
Cost Management
Material Price Variance: = Actual Quantity{Standard price per unit of material-Actual price per unit of material}
(iii) Material Usage Variance: The material quantity or usage variance results when actual quantity of
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