Fall 2013_ACCT 306 Variable definitions for variances Direct Labor: AQ * AP AQ*SP SQA*SP

AQ: Acutal Labor hours used during the period AP: Actual wages paid per hour SP: Standard wages paid per hour SQA: (Standard hours for each unit to be produced) * (Actual number of units produced) Direct Materials: AQ*AP (materials purchased) AQ*SP (materials used) SQA*SP NOTE: Materials may have different AQ for purchased (on the right) and materials placed into production (on the left). AQ: Actual quantity of materials purchased. OR Actual quantity of materials placed into production AP: Actual priced paid per unit of material SP: Standard price per unit of material SQA: (standard price paid per unit of material used) * (Actual number of units produced)

VOH: AQ*AP AQ*SP SQA*SP NOTE: when looking at overhead variances your first thought should be: what is my cost driver! AQ: actual quantity of cost driver. This could be the actual number of DLH, MH, etc. AP: Actual price paid NOTE: typically - overhead variances will give you the total of AQ*AQ or the actual variable overhead amount. AQ*SP budget SP: this is your predetermined rate = budgeted VOH / budgeted cost driver SQA: (standard cost driver per unit)*(actual number of units produced) This could be DLH per unit, or material per unit. This may or may not be the same as FOH it depends on whether the cost driver is the same or not!! FOH: Actual Budget SQA*SP NOTE: when looking at overhead variances your first thought should be: what is my cost driver! Actual: what are the actual FOH cost for the period Budget: what are the budgeted FOH cost for the period. Watch whether annual versus monthly budgets. Also, you may need to back into this using the formula for the predetermined OH rate: bud OH / bud driver SP: this is your predetermined rate = budgeted VOH / budgeted cost driver SQA: (standard cost driver per unit)*(actual number of units produced)

Fall 2013_ACCT 306 Variable definitions for variances This could be DLH per unit, or material per unit. This may or may not be the same as VOH it depends on whether the cost driver is the same or not!!