Point at which control functions and planning of management come together is known as variance. A variance in management accounting may be favourable (costs lower than expected or revenues higher than expected) or adverse (costs higher than expected or revenues lower than expected).
Difference between actual quantity use and input quantity for output is multiplied with budgeted price to calculate
Difference between actual quantity use and input quantity for output is multiplied with budgeted price to calculate efficiency variance. The efficiency variance is the difference between the actual unit usage of something and the expected amount of it. The expected amount is usually the standard quantity of direct materials, direct labor, machine usage time, and so forth that is assigned to a product.
Level of used input to achieve a determined level of output is termed as
Level of used input to achieve a determined level of output is termed as efficiency. Efficiency is the (often measurable) ability to avoid wasting materials, energy, efforts, money, and time in doing something or in producing a desired result.
Flexible budget variance is subtracted from actual cost to calculate
Flexible budget variance is subtracted from actual cost to calculate flexible budget cost. A flexible budget is a budget that adjusts or flexes with changes in volume or activity. The flexible budget is more sophisticated and useful than a static budget. (The static budget amounts do not change. They remain unchanged from the amounts established at the time that the static budget was prepared and approved.)
An efficiency variance is subtracted from actual input quantity to calculate