[Rachel]

This variance analysis is making me crazy. Anyone have a list of all the different possible equations? When do you use the simple Budgeted-Actual equation and when do you have to use the other ones? My brain cant think anymore

AUD-70, 71, 85
BEC-63, 76
REG-77
FAR-76

[Laura M.]

I am not sure if this is what you are asking, but google PURE and DADS and SAD mnemonics for BEC. I haven't gotten a question wrong since I came across these!

FAR - 82
AUD - 79 (lost credit), 75
BEC - 76
REG - 91

CPAexcel and Ninja Notes and Ninja MCQ

[mmp7183]

AQ x AP

AQ x SP

SQ x SP

difference between the first two is the Price Variance (see how the diff is only the price).

difference between the last two is the Quantity Variance. Quantity because you are comparing the quantities.

You can substitute the Q with the H (for Hours, as in DL hours) and the P with the R (rate).

AH x AR

AH x SR

SH x SR

difference between the first two is the Rate Variance (see how the diff is only the rate).

difference between the last two is the Efficiency Variance. Efficiency because you are comparing the actual hours against the standard hours.

The above should be helpful. Whether they give you the amount of the variance and requires you to answer the hours or the price (whether actual or standard), you can just plug and let the above equations play out. Remember it is Favorable if your bottom numbers are higher than the number just right above it (since you are trying to stay within the budget or standard cost).

Oh-Hey-Yoh Candidate

FAR - 89 Dec 2013 (CPAExcel)
AUD - 89 Feb 2014 (CPAExcel)
BEC - 83 Aug 2014 (Becker)
REG - 85 Oct 2014 (Becker)

CMA (Aug 2011), CFSA (Dec 2008), Philippine CPA (Nov 2004)

[Anonymous]

Once I saw the Becker version of the equation format it was so much easier to understand.

@mmp7183, for material price and quantity variance be careful on your (AQ x SP) portion of the equation. From what I remember that messed me up big time. AQ was actual quantity purchased for price variance and AQ was actual quantity put in use for material variance. Correct me if I'm wrong though.

[Anonymous]

Price variance for materials is like evaluating the performance of the purchasing manager, so you want to look at the units purchased

Efficiency/quantity variance for materials is evaluating the manufacturing manager, so you just want to look at the units used. So I think it's helpful to draw what Becker has and to draw 2 separate brackets instead.

[mmp7183]

@ dunkin – yes price variance uses only actual quantity, which is represented by AQ. Again, difference between the 1st two equations will be the price/rate variance. As for the material variance (i assume this is efficiency variance since this is material used), it will be difference between the middle equation and the bottom. You will see the middle equation still uses AQ which is I think what you meant.

Anyway I know those works because when I reviewed for my CPA in my home country, the instructor/reviewer (live classroom) was the author of a book and that is what he has taught us on how to tackle variance questions. I even used those formats when I studied for my CMA and when I took BEC last August, so I know it works wonders. 🙂

Oh-Hey-Yoh Candidate

FAR - 89 Dec 2013 (CPAExcel)
AUD - 89 Feb 2014 (CPAExcel)
BEC - 83 Aug 2014 (Becker)
REG - 85 Oct 2014 (Becker)

CMA (Aug 2011), CFSA (Dec 2008), Philippine CPA (Nov 2004)

[Author]

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