In management control, point of reference for making comparisons of performance is expected performance. The expected performance is based on the overall distribution that is fit to your data and estimates the nonconforming parts that you can expect to be outside the specification limits.
If actual payment to labour is $1200 and budgeted rate is $1000, then labour price variance would be unfavourable. An unfavorable variance means that the cost of labor was more expensive than anticipated, while a favorable variance indicates that the cost of labor was less expensive than planned.
An expected performance of company is also known as
Determined price at which company expects to pay for every single unit is called standard price. Standard price is the pre-established uniform price for a good or service, based on its historical price, replacement cost, or an analysis of its competitive position in the market.
If actual result is $65000 and static budget variance is $35000, then static budget amount will be
Consideration of increased operating income relative to budgeted amount is classified as favourable variance. A favorable budget variance indicates that an actual result is better for the company (or other organization) than the amount that was budgeted.
If an actual price of material is $700 and budgeted price is $900, then the
If an actual price of material is $700 and budgeted price is $900, then the price variance is favourable. If the actual cost incurred is lower than the standard cost, this is considered a favorable price variance.
In costing and budgeting hierarchy, an example of product sustaining cost is