Formulas

Write the following formulas

Direct Material (DM) formula:

_______________________________________________________

Direct Labor (DL) Formula:

_______________________________________________________

Manufacturing Overhead (MOH) formulas:

_______________________________________________________ = variable MOH rate

_______________________________________________________ = Standard Variable MOH

_______________________________________________________ = Fixed MOH rate

_______________________________________________________ = Standard Fixed MOH

Legend:

• DM_ Direct Material
• DL_Direct Labor
• MOH_ Manufacturing Overhead
• MH_ Machine hours

Flexible budget components are divided into two components:

______________________ and __________________________

______________________ - indicated how much of the total variance is due to paying a higher or lower price than expected for direct materials

DM price Variance = (______ x ______) - (______ x ______)

_____________________________ variance indicates how much of the total variance is due to using larger or smaller quantity of direct materials than expected.

DM quantity variance - ______ X (______ - ______)

Legend:

• AQ _Actual Quanity
• AP_Actual Price
• SP_Standard Price
• AQU_Actual quantity in Units
• SQU_Standard Unity in Units

__________________________ indicates how much of the total labor variance is due to paying a higher or lower hourly wage rate than expected.

___________________________ indicates how much of the variance is due to using a greater or lesser amount of time than anticipated.

Direct Labor Rate Variance Formula:

DL rate variance = _________ Hours x (_________ Rate - _________ Rate)

Direct Labor Efficiency Variance

DL efficiency variance = _________ Rate x (_________ Hours - _________ Hours Allowed)

___________________________ indicates the difference between the actual variable MOH costs incurred during the period and the mount of variable MOH costs expected.

Variable MOH rate variance formula:

Variable MOH rate variance = _________ Hours x (_________ Rate - _________ Rate)

___________________________ Variance indicates the difference between the actual machine hours run and the standard machine hours allowed for the actual production volume, calculated at the variable MOH rate.

Variable MOH Efficiency Variance formula:

Variable MOH Efficiency Variance = _________ Rate X (_________ - _________ Hours Allowed)

___________________________ variance indicates the difference between the budgeted fixed overhead and the standard fixed overhead costs allocated to production.

Uses a two part formula to calculate:

1. Standard Fixed Overhead Costs Allocated to production = (_________ hours allowed x _________ rate)
2. Fixed overhead volume variance = _________ fixed overhead - _________ fixed overhead cost allocated to production.