## Sales Mix and Quantity Variances

The sales volume variance has two components, the sales mix variance and the sales quantity variance. The sales mix variance shows the effect of the difference between the actual and budgeted sales mix. The sales quantity variance shows the effect of the difference between the actual volume sold at the budgeted mix and the budgeted volume.

## Sales Variance Analysis in Accounting

The total sales variance sometimes referred to as the sales value variance is the difference between the actual sales and budgeted sales and can be split and analysed into the sales volume variance and the sales price variance.

## Normal Costing System and Product Costs

This tutorial explains the normal costing system and the main differences it has to an actual costing system and a standard costing system.

In a standard costing accounting system, fixed manufacturing overhead has two main variances budget and volume. Fixed overheads are those costs which do not vary in response to the level of production output. To operate a standard costing system and allocate fixed overhead, the business must first decide on the basis of allocation, and calculate the standard fixed overhead allocation rate.

In a standard costing accounting system, variable manufacturing overhead has two main variances rate and efficiency. Variable overheads are those costs which vary in response to the level of production output but which cannot be attributed to individual units of production. To operate a standard costing system and allocate variable overhead, the business must first decide on the basis of allocation.

## Direct Labor Variance Journal

In a standard costing accounting system, direct labor has two main variances price and efficiency. Unlike direct materials, direct labor is used at the same time as it is purchased, and therefore the price and efficiency variances occur at the same time on the same production run, and a single journal is needed post the variances together with the standard and actual cost to the accounting system.

## Direct Labor Efficiency Variance

The direct labor efficiency variance is one of the main variances used in standard costing and represents the difference between the standard quantity of labor and the actual quantity of labor used, multiplied by the standard labor rate.

## Direct Labor Price Variance

The direct labor price variance sometimes referred to as the direct labour rate variance, is one of the main variances used in standard costing and represents the difference between the standard labor rate and the actual labor rate, multiplied by the number of units of labor used.

## Quiz 31: Costing – Direct Materials Variance

Test your knowledge of double entry bookkeeping with our online direct materials variance quiz. Not Ready for the Direct Materials Variance Quiz? If you

## Direct Materials Quantity Variance

The direct material quantity variance is one of the main variances used in standard costing and represents the difference between the standard material quantity and the actual material quantity, multiplied by the standard price per unit.

## Direct Materials Price Variance

The direct materials price variance is one of the main variances used in standard costing and represents the difference between the standard material unit price and the actual material unit price, multiplied by the quantity of units used.