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Mastery Problem: Manufacturing Cost Variance (Actual Costs Compared to Standard Costs) Manufacturing cost variances may come from material costs that are higher or lower than
Mastery Problem: Manufacturing Cost Variance (Actual Costs Compared to Standard Costs) Manufacturing cost variances may come from material costs that are higher or lower than expected, material usage that is not what was expected, higher or lower labor costs than expected, or more or less time spent to produce an item than expected. Overhead cost and volume variances are another cause for costs to be higher or lower than what was expected. The total manufacturing variance can be broken down by cost type (materials, labor, overhead) and further by cost variances within cost types and usage or efficiency variances within cost types: Direct Materials Price Variance Direct Materials Cost Variance Direct Materials Quantity Variance Direct Labor Rate Variance Total Manufacturing Cost Variance Direct Labor Cost Variance Direct Labor Time Variance Variable Factory Overhead Controllable Variance Factory Overhead Cost Variance Fixed Factory Overhead Volume Variance
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