The cost variance rate is a very important financial indicator, which can be used to measure the difference between the actual cost and the standard cost, and can also help the management of the enterprise to understand the gap between the actual level of production cost and the standard level, so as to carry out effective cost control and management.
It is calculated as: Cost Variance Rate = Difference Between Actual Cost and Standard Cost Actual Cost 100%.
According to the causes of cost differences, they can be divided into various types, such as material cost difference rate, labor cost difference rate, and manufacturing cost difference rate. Let's introduce the calculation methods and characteristics of these cost difference rates:
1.Material Cost Variance Rate:The material cost variance rate refers to the ratio of the material cost variance to the material plan cost, which can help the enterprise management understand the gap between the actual level of production cost and the standard level, so as to carry out effective cost control and management.
The calculation formula is: material cost variance rate = (opening material cost variance + current month warehousing cost variance) opening raw material planned cost + current month warehousing material planned cost) 100%.
Among them, the material cost difference at the beginning of the period refers to the material cost difference at the end of the previous period, and the warehousing cost difference in the current month refers to the material cost difference actually stored in the current month. The positive or negative material cost variance rate depends on the numerator's variance amount, if the actual material cost is greater than the planned cost, the variance is the overrun amount, and the variance rate is positive;If the actual material cost is less than the planned cost, the variance is the savings and the variance rate is negative.
2.Labor Cost Variance Rate:The labor cost variance rate refers to the ratio of the labor cost variance to the labor planning cost, which can help the management of the enterprise to understand the gap between the actual level of production cost and the standard level, so as to carry out effective cost control and management.
The calculation formula is: Labor cost variance rate = (Beginning labor cost difference + Labor cost difference in the current month) Beginning labor planning cost + Labor planning cost incurred in the current month) 100%.
Among them, the labor cost difference at the beginning of the period refers to the labor cost difference at the end of the previous period, and the labor cost difference in the current month refers to the labor cost difference that actually occurs in the current month. The positive or negative of the variance rate of labor costs depends on the variance of the numerator, if the actual labor cost is greater than the planned cost, the variance is an overrun, and the variance rate is positiveIf the actual labor cost is less than the planned cost, the variance is the savings and the variance rate is negative.
3.Manufacturing Cost Variance Rate:The manufacturing expense variance rate refers to the ratio of the manufacturing expense variance to the planned cost of manufacturing expenses, which can help the management of the enterprise to understand the gap between the actual level of production cost and the standard level, so as to carry out effective cost control and management.
The formula is calculated as follows: Manufacturing Expense Variance Rate = (Beginning Manufacturing Expense Variance + Manufacturing Expense Variance Incurred in the Current Month) Planned Cost of Manufacturing Expenses at the Beginning + Planned Cost of Manufacturing Expenses Incurred in the Current Month) 100%.
Among them, the difference in manufacturing expenses at the beginning of the period refers to the difference in manufacturing expenses at the end of the previous period, and the difference in manufacturing expenses incurred in the current month refers to the difference in manufacturing expenses actually incurred in the current month. The positive or negative rate of difference in manufacturing expenses depends on the amount of variance in the numerator, if the actual cost of manufacturing is greater than the planned cost, the amount of difference is the amount of overrun, and the rate of difference is positive;If the actual manufacturing cost is less than the planned cost, the variance is the savings and the variance rate is negative.
It should be noted that different cost difference rates may correspond to different cost control purposes, and enterprises need to choose the appropriate cost difference rate for management and decision-making according to their actual situation. At the same time, enterprises also need to formulate corresponding cost control measures according to different cost difference rates to achieve the goal of reducing costs and improving efficiency.
How to calculate the cost variance rate
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