[Journey to Fate]

Does anyone have a good trick of remembering if its favorable or unfavorable when computing the price usage efficiency etc rates??

BEC- 67, 69

[Sudad]

If the actual is more than the standard, then it is unfavorable. For example, if the actual price of material is more than the standard price, then the difference of the price multiply it with the actual quantity is equal to price variance and it is favorable. It is favorable if the actual is less than the standard. For example, if the actual quantity used is less than the standard quantity, then the difference multiply it with the standard price is equal to usage variance and it is favorable. For price variance, you can use: AQX(SP-AP), if your answer is negative then it is unfavorable and vice versa. For usage variance, you can use: SPX(SQ-AQ), again if your answer is negative then it is unfavorable. You can use the same concept for labor variance. I hope that helps.

DONE!!!

[Sudad]

Correction:… the price variance and it is unfavorable.

DONE!!!

[wobrie4]

If you go over budget, it's unfavorable. Think of it that way.

If you spend more on materials than you budgeted, that's not good. If you use more materials than you planned, that's not good. If you paid more for labor than you planned, that's not good. If you don't use labor as well as you planned, that's not good.

On My Way to a CPA...

FAR- 83 (12/02/12) (Try #1...by some miracle)
BEC- 80 (2/23/13) (Try #1... by some miracle)
AUD- 77 (05/04/13) (Try #1... by some miracle)
REG- 79 (08/03/13)(Try #1... by some miracle)

[Author]

Replies