What Is Differential Analysis?
The so-called cost difference is the difference between the actual cost of the product and the standard cost. The difference formed by actual cost exceeding standard cost is called Adverse variance, which is usually expressed by letter A; the difference formed by actual cost less than standard cost is called Favorable variance, which is usually expressed by letter F.
Cost variance analysis
Right!
The so-called cost difference is the difference between the actual cost of the product and the standard cost. The difference formed by actual cost exceeding standard cost is called Adverse variance, which is usually expressed by letter A; the difference formed by actual cost less than standard cost is called Favorable variance, which is usually expressed by letter F.
- Chinese name
- Cost variance analysis
- Explanation
- Difference between actual cost and standard cost
- Pinyin
- chengbenchayifenxi
- Classification
- Favorable difference unfavorable difference
Management authorities can find problems based on cost differences, specifically analyze the causes and responsibilities of the differences, and take corresponding measures to achieve cost control.
General pattern diagram of cost difference calculation
(1) (input) | (2) | (3) (Output) |
Actual quantity × actual price | Actual quantity × standard price | Standard quantity × standard price |
AQ × AP | AQ × SP | SQ × SP |
Price difference = (1)-(2) = AQ (AP-SP) |
Quantity difference = (2)-(3) = (AQ-SQ) SP |
Analysis of the differences in fixed manufacturing costs
The variance analysis of fixed manufacturing costs will be different because its budget does not change with changes in output. If the standard allocation of fixed manufacturing costs is calculated based on output, then the standard allocation rate per unit of product is the standard cost of fixed manufacturing costs per unit of product.
The differences associated with formal entry records using the standard cost system have the following advantages:
(1) Unfavorable differences can be reflected in the debit of the relevant account, and favorable differences can be reflected in the lender of the relevant account;
(2) Timely confirmation of differences is conducive to cost control;
(3) It is more formal and emphasized than the case where the difference is only analyzed based on records (standard cost system).
Difference analysis of direct materials
Direct material differences, including material usage differences and material price differences, of which:
Material price difference = actual quantity × actual priceactual quantity × standard price
= Actual quantity × (actual price-standard price)
Material usage difference = actual quantity × standard pricestandard quantity × standard price
= Standard price × (actual quantity-standard quantity)
Case study: Suppose the relevant data of a company is shown in the following table:
| Standard cost | Actual cost |
Dosage | unit price | Amount | Dosage | unit price | Amount |
direct material | 4 400 (110 pieces × 40) | 1.00 | 4 400 | 4 000 | 1.20 | 4 800 |
According to the above formula, calculate the direct material difference:
Material consumption difference = 1.00 yuan × (4 000kg-4 400kg) = -400 (yuan) (F)
Material price difference = 4 000kg × (1.20 yuan-1.00 yuan) = 800 (yuan) (U)
Total direct material differences: -400 + 800 = 400 (yuan) (U)
Because the purchasing department has control over the price of the purchased materials, in general, price differences should be borne by the purchasing department. The difference in the quantity of materials is generally the responsibility of the production department, but sometimes it may be the responsibility of the purchasing department, and specific analysis and research should be conducted.
Direct manual difference analysis
Direct labor differences include direct labor efficiency differences and direct labor wage rates.
Difference in direct labor rate = actual labor hours × actual wage rate-actual labor hours × standard wage rate
= Actual man-hours consumed × (actual wage rate-standard wage rate)
Direct labor efficiency difference = (actual working hours × standard wage rate)-(standard working hours × standard wage rate)
= (Actual working hours-standard working hours) × standard wage rate
The difference in wage rates may be caused by workers who have been upgraded or downgraded to use different wage levels in production (which will be reflected in changes in the average wage rate), or may be an adverse wage rate difference caused by overtime wages. Department responsible. But it may also be due to the adjustment of wage standards, so it should be analyzed in detail. The reason for the difference in efficiency may be due to the proficiency of workers, equipment, management issues, or the quality of raw materials. It is generally the responsibility of the production department, but it may also be the responsibility of the purchasing department.
Case study: Suppose the relevant data of a company is shown in the following table:
| Standard cost | Actual cost |
Dosage | unit price | Amount | Dosage | unit price | Amount |
Direct labor | 110 hours (110 pieces × 40) | 9.00 | 990 | 90 | 10 | 900 |
According to the above formula, calculate the direct artificial difference:
Direct labor rate difference = 90 (hours) × (10-9) yuan = 90 (yuan) (U)
Direct labor efficiency difference = 9.00 (yuan) × (90-110) hours) = -180 (yuan) (F)
Total direct human differences: 90-180 = -90 (yuan) (F)
Variance analysis of variable manufacturing costs
The variable manufacturing cost difference is composed of the variable manufacturing cost efficiency difference (that is, the quantity difference) and the variable manufacturing cost consumption difference (the price difference).
Variable manufacturing cost efficiency difference: Refers to the difference between the variable manufacturing cost calculated based on the actual man-hours consumed in production and the variable manufacturing cost calculated based on the standard man-hours. The calculation formula is:
Variable manufacturing cost efficiency difference = (actual working hours x standard allocation rate)-(standard working hours x standard allocation rate)
= (Actual working hours-standard working hours) × standard distribution rate
Variance in variable manufacturing costs: Refers to the difference between the actual variable manufacturing costs and the standard variable manufacturing costs based on actual working hours. The calculation formula is as follows:
Variable manufacturing cost consumption difference = (actual working hours × actual allocation rate)-(actual working hours × standard allocation rate)
= Actual working hours × (Actual distribution rate-Standard distribution rate)
Case study: Suppose that a company's 19 × 1 January budget month should complete 45,000 hours of direct labor hours for normal work and 180,000 units (0.25 hours of direct labor hours for a unit product). Budget implementation results:
(1) Actual production of 160,000 pieces
(2) The standard for actual completion of production is direct manual hours of 40 000 hours (160 000 × 0.25)
(3) 41 000 hours of direct labor hours
The variable manufacturing cost budget for the month is shown in the following table:
| Cost per hour | Expected output Budget (1) | According to actual output Adjusted budget (2) | Actual cost (3) | Cost difference (4) = (3) (2) |
Yield | | 180 000 | 160 000 | 160 000 | |
power | 0.03 | 5 400 | 4 800 | 5 000 | 200 (U) |
service | 0.05 | 9 000 | 8 000 | 8 400 | 400 (U) |
Management salary | 0.70 | 126 000 | 112 000 | 113 600 | 1 600 (U) |
other | 0.10 | 18 000 | 16 000 | 17 000 | 1 000 (U) |
Volatile system Total cost | 0.88 | 158 400 | 140 800 | 144 000 | 3 200 (U) |
Analysis of the differences in fixed manufacturing costs
Fixed manufacturing costs are not affected by changes in the level of production activity within a certain relevant range and are therefore constant. Therefore, fixed manufacturing costs are controlled through a fixed budget. The fixed manufacturing cost difference is composed of the fixed manufacturing cost budget difference and the fixed manufacturing cost production capacity utilization difference.
Budget variance of fixed manufacturing costs: Also known as "fixed manufacturing cost differences" refers to the difference between the actual fixed manufacturing costs and the budget fixed manufacturing costs, and represents overpayment or savings. Its calculation formula is:
Fixed manufacturing cost budget variance = fixed manufacturing cost-fixed manufacturing cost budget
Production capacity utilization difference of fixed manufacturing costs: also known as "fixed manufacturing cost quantity difference" or "fixed manufacturing cost divisor difference" refers to the allocation of fixed manufacturing costs calculated according to the standard hours (predetermined allocation rate) that should be consumed The difference between the number and the fixed manufacturing cost budget. This difference is caused by changes in the estimated business volume, and reflects the degree of utilization of planned production capacity, which can only be controlled by controlling the business volume. The calculation formula is as follows:
Fixed manufacturing cost production capacity utilization difference = fixed manufacturing cost budget number-(standard hours to be consumed × fixed manufacturing cost allocation rate) = (normal production capacity in terms of working hours-standard working hours based on actual output) × Standard allocation rate of fixed manufacturing cost per man-hour
The differences in utilization of fixed manufacturing costs and production capacity have the following characteristics:
(1) If the estimated business volume is equal to the standard hours that should be consumed, there is no difference in utilization of production capacity;
(2) If the estimated business volume is greater than the standard hours that should be consumed, the difference in utilization of production capacity is an adverse difference, indicating that the planned production capacity has not been fully utilized;
(3) If the estimated business volume is less than the standard man-hours that should be consumed, the difference in utilization of production capacity is a favorable difference, indicating that the planned production capacity has been fully utilized.
case analysis
Suppose that the total fixed manufacturing cost budget of the enterprise in January 19 January is 84 000 yuan, and the estimated direct labor hours are 37 667 man-hours. The standard allocation rate of fixed man-hours per unit manpower = 84 000 ÷ 36 667 = 2.25 (yuan / hour ).
The fixed manufacturing cost budget for the month is shown in the following table:
| Expected output Budget (1) | According to actual output Adjusted budget (2) | Actual cost (3) | Cost difference (4) = (3)-(2) |
Yield | 180 000 | 160 000 | 160 000 | |
Management salary | 16 000 | 16 000 | 17 000 | 1 000 (U) |
Factory rent | 20 000 | 20 000 | 20 000 | 0 |
service | 6 000 | 6 000 | 5 000 | 1 000 (F) |
Indirect labor | 10 000 | 10 000 | 10 400 | 400 (U) |
Plant equipment maintenance | 24 000 | 24 000 | 24 000 | 0 |
other | 8 000 | 8 000 | 8 600 | 600 (U) |
Total fixed manufacturing costs | 84 000 | 84 000 | 85 000 | 1 000 (U) |
Analysis of fixed manufacturing cost variance:
Fixed manufacturing cost budget variance = 85 000-84 000 = 1 000 (U)
Fixed manufacturing cost production capacity utilization difference = 84 000-160 000 × 0.25 × 2.25 = (36 667-160 000 × 0.25) = 84 000-90 000 = -6 000 (F)
