Cost Difference and Efficiency Difference: What metric do they reflect?

The difference in consumption reflects the difference caused by the actual fixed manufacturing that deviates from the budget and the fixed manufacturing cost; The efficiency variance reflects the difference caused by the actual unit hours that deviate from the unit standard hours.

Energy Variance = Fixed Manufacturing Expense Budget - Fixed Manufacturing Expense Standard Cost = Fixed Manufacturing Expense Budget - Fixed Manufacturing Expense Actual Production Standard Labor Hours Standard Allocation Rate.

Output Variance = (Standard Man-hours under Budgeted Production - Actual Man-hours Under Actual Output) Standard Allocation Rate = Budgeted Fixed Manufacturing Expenses - Actual Man-hours Under Actual Production Standard Allocation Rate.

The first item of the two is the same, and the working hours of the latter item are different, one is the standard working hours of the actual output, and the other is the actual working hours.

Consumption variances reflect fixed manufacturing costs.

The difference between the actual amount and the deviation from the budgeted fixed manufacturing expense. Efficiency variance reflects the deviation of the actual unit hours from the unit standard hours.

The difference generated.

1. The formula for calculating the cost difference is:

Fixed Manufacturing Cost Variance Fixed Manufacturing Cost Actual Fixed Manufacturing Cost Budget.

Fixed Manufacturing Costs Actual Fixed Manufacturing Cost Standard Allocation Rate Production Energy.

2. The difference in efficiency includes the difference in direct labor efficiency and the difference in the efficiency of variable manufacturing costs.

Variable Manufacturing Cost Efficiency Variance = (Actual Man-hours Under Actual Production Standard Man-hours Under Actual Output) Variable Manufacturing Cost Standard Allocation Rate.

Direct Labor Efficiency Variance = (Actual Labor Hours per Unit Product Standard Labor Hours per Unit Product) Actual Production Standard Wage Rate.

Consumption variance reflects the variance that occurs when the actual amount of the fixed manufacturing cost deviates from the budgeted fixed manufacturing cost. The efficiency difference reflects the difference caused by the deviation of the actual working hours of the unit from the standard working hours of the pin unit.

1. The formula for calculating the cost difference is:

Fixed Manufacturing Cost Variance Fixed Manufacturing Cost Actual Fixed Manufacturing Cost Budget.

Fixed Manufacturing Costs Actual Fixed Manufacturing Cost Standard Allocation Rate Production Energy.

2. There are direct differences in labor efficiency, changes in manufacturing costs, and differences in efficiency.

Variable Manufacturing Cost Efficiency Variance = (Actual Man-hours Under Actual Production Standard Man-hours Under Actual Output) Variable Manufacturing Cost Standard Allocation Rate.

Direct Labor Efficiency Variance = (Actual Labor Hours per Unit Product Standard Labor Hours per Unit Product) Actual Production Standard Wage Rate.

Consumption variances are typically cost variances or expense variances, which are the difference between actual and budgeted costs. In management accounting and budget control, the cost variance is used to measure the difference between the actual and expected expenses in the course of production or operation, in order to analyze and manage the efficiency and economics of the business.

The cost difference can involve two differences: the price difference and the volume difference. Here's an explanation of what these two differences mean:

Price variance:

The spread is the difference between the actual purchase of an item or service and the budget. This discrepancy usually occurs between cost and budget, as the actual purchase cost may be higher or lower than the budgeted cost. The spread is calculated based on the difference between the actual quantity multiplied by the actual ** and the budgeted quantity multiplied by the budgeted **.

Example: A company budgets to buy 100 parts, and the budgeted cost of each part is $10. However, 100 parts were actually purchased, but the actual cost of each part was $12.

Then, the spread is (100 parts x ($12 - $10)) = $200 unfavorable spread.

Usage variance:

The difference is the difference between what is actually used and what is budgeted. This discrepancy usually occurs in the production process, when the quantity actually used exceeds or falls below the quantity budgeted. The calculation of the quantity difference is based on the difference between actual multiplied by actual usage and actual multiplied by budgeted usage.

Example: A company budgets to produce 100 products, and each product requires 5 parts. However, 100 products were actually produced, but 6 parts were actually used for each product.

Then, the quantity difference is (100 products x (6 parts - 5 parts)) = 100 parts of the unfavorable quantity difference.

In summary, the cost variance is the difference between the actual cost or expense and the budgeted cost or expense. This difference can be divided into two types: price spread and volume spread. The spread is the difference between the actual and budgeted usage, and the spread is the difference between the actual usage and the budgeted usage.

By analyzing these differences, managers can understand the performance of the business and take appropriate measures to improve operational efficiency and control costs.

Variable overhead efficiency variance is the difference in gross variable indirect costs due to the difference between actual and standard working hours.

It consists of two parts:

The first is the difference in the efficiency of the pure variable overhead, that is, the difference in the overhead cost caused by the excessive workload spent on the qualified product;

The second is the difference in the quality of variable overheads, that is, the difference in variable overhead costs caused by the excessive amount of work spent on defective products.

Net variable overhead efficiency variance = [Actual hours worked on actual production – Standard hours worked on actual production) Variable overhead budget allocation rate].

Variable Overhead Quality Variance = [Actual Labor Hours for Actual Production – Standard Labor Hours for Actual Good Goods) Variable Overhead Budget Allocation Rate].

The variable overhead efficiency variance is due to the increase in costs caused by the actual working hours deviating from the standard and the over-consuming workload, so it is formed for the same reasons as the direct labor efficiency variance.

Answer]: B is the difference in output under the three-difference analysis method, option C is the difference in efficiency under the three-difference analysis method, and option or Lud D is the difference in the cost of fixed manufacturing expenses.