IGNOU BEE 3 2026 - With reference to cost management, explain following:(i) Material

Question

With reference to cost management, explain following:

(i) Material variance,

(ii) Fixed overhead variance,

(iii) Variable overhead variance,

(iv) Labor variance, and

(v) Sales variance.

06 Mar 2026

Answer :

Word Count : 309

Cost management in power distribution organizations involves controlling and analyzing various costs to improve efficiency and profitability. Variance analysis is an important technique used to compare actual performance with standard or budgeted performance and identify deviations. Material variance refers to the difference between the standard cost of materials that should have been used for a particular level of output and the actual cost of materials used. It helps in analyzing whether materials were purchased at higher prices or used inefficiently. Material variance generally includes material price variance and material usage variance. In power distribution projects such as installation of transformers or cables, controlling material variance helps reduce unnecessary expenditure. Fixed overhead variance represents the difference between the

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