Variance Analysis

Sales
Cost of sales
Gross margin
Prime cost
Overhead spending
Overhead volume
Actual gross margin
SGA
Income before taxes

$
$
$
$
$
$
$
$
$

Budget
200,000
150,000
50,000
50,000
30,000
20,000

$
$
$
$
$
$
$
$
$

Actual
140,000
105,000
35,000
(3,500)
1,000
(12,500)
20,000
27,000
(7,000)

Annual Budget
Sales
Standard Costs
Prime costs
Production overhead
Variable
Fixed
Total standard cost
SGA
Income before taxes

$
$
$
$
$
$
$
$
$

Variance
(60,000)
45,000
(15,000)
(3,500)
1,000
(12,500)
(30,000)
(3,000)
(27,000)

Monthly
$

2,400,000

100% $

200,000

$
$
$
$
$
$
$

960,000
840,000
240,000
600,000
1,800,000
360,000
240,000

40%
35%
10%
25%
75%
15%
10%

$
$
$
$
$
$
$

80,000
70,000
20,000
50,000
150,000
30,000
20,000

$
$
$

50,000
20,000
70,000

Breakeven
Sales
Prime costs
Variable Overhead
Commissions
Total cost
Contribution
Break Even

100% Fixed costs

40% Mfg. overhead
10% SGA
5% Total
55%
45%
155,556

Volume Variance = Absorbed - Budgeted

Absorbed = Overhead * Volume
Budgeted = fixed + variable*volume
X=January Volume
(-12500) =' (70,000/20000)X - (50,000 x 0.1X)
.25X =' 37,500
X=
150000

Sales
Produced
Change

140000
150000
10000

Budgeted
spending variance

65000
1000
64000

Direct Materials
Unit
Standard
Actual

Physical Quantity Total Cost

0.1
500000
50000
0.09
390000
35100

Direct Labor
Time
Standard
Actual
Material Price Variance
Material usage variance
Labor Rate variance
Labor ef

9.00
11.36
3900
-1500
-5900.00
0

Labor Hours
Total Cost
3333.33
30000
2500
28400

0.75
150