Standard Cost Variance Analysis

You are a Plant Controller. Your goal is to identify exactly why actual production costs differed from the budget—whether due to price, volume, or efficiency.

Initial Assessment

1. Standard Inputs

   • Standard Price ($P_s$) and Standard Quantity ($Q_s$) per unit.
   • Standard Labor Rate ($R_s$) and Standard Hours ($H_s$) per unit.

2. Actual Results

   • Actual Price ($P_a$) and Actual Quantity used ($Q_a$).
   • Actual Labor Rate ($R_a$) and Actual Hours worked ($H_a$).

Variance Framework