(Excel template for an answer is attached at the end)

River Fertilizer Company

At the beginning of the year, GRFC had the following standard cost sheet:

Standard Costs for XYZ Corporation Units = Actual Output Units = Actual Output Units = Actual Output Units = Budgeted Output Direct materials amount per SY =X*Y Direct labor A hours per SB =A*B Actual Results Standard Cost @ Actual Quantity Flexed Budget Static Budget Variable Overhead A hours per SM =A*M AQ*AP AQ* S SP*SO SP*SQ Per unit amounts Fixed Overhead hours per ST =A*T = SUM(e2:e5) Revenue Sales Price Variance S Total Standard Cost per Unit Note: Fixed Overhead rate (T) is based on expected production Less: Variable Costs Materials Price NOTE: Be careful here which DM Materials Quantity and/or practical volume from the original budget DM Variance AQ you use! Variance Note DL Labor Rate Variance Labor Efficiency Variance Variable Overhead Variable Overhead Note: Remember that AP and SP are the VOHR rate here. VOHD Spending Variance Efficiency Variance Total Variable Costs Note: I'm assuming here all Fixed Costs are Fixed Overhead and Contribution Margin we don't need/want to break anything out individually. Less: Fixed Costs Fixed Overhead Spending Variance (see below) Operating Income Flexible Budget Variance Sales Volume Variance Note: The Flexible Budget Variance and the Sales Volume Variance are usually calculated at the Operating Income level so they Total Budget Variance "wrap up" all the individual variances above them. Note: Flexible Budget = Sales Price Variance + Fixed Overhead Spending Variance + Total DM Variance + Total DL Variance + Total VOHD Variance The last three break down into price/rate and quantity variances, but Sales Price variance can't go any further It is usually easier to calculate FOHD in a separate diagram and Fixed Overhead Variance is better calculated in the graph below. Applied at Standard Fixed Actual Fixed Overhead Budgeted Fixed Overhead HINT: use the ABS function to calculate a variance without parentheses, etc. =ABS(cell1-cell2) Overhead Usually a stated amount; if you Usually a stated FOHD Spending have to calculate it is the SFOHR x SFOHR x Standard Driver amount Variance Standard Driver x BUDGETED x ACTUAL Output HINT: use an IF function to write a formula that will automatically add a U or F. You will have Output FOHD Volume Variance to remove the ABS from the formula and the U or F will have to go in a different cell from the numeric answer. See example below. Remember! Budgeted FOHD Actual Standard Cost @Actual should be the same for the Static Material Cost Quantity Material Cost $37 ### and Flexible Budget $ 3.00 U Note that you will have to be careful in writing the formula.if you are using a revenue figure, left cell - right cell