1. Planning and operational variances
Chapter12
Planning and operational variances
成员：宋雪羽
邓雨思
康诗意

2. 1 2 3 4 Revising a budget or Standard cost
Planning and operational variances for sales 3
Planning and operational variance for material 4
Planning and operational variance for labour

3. 1 2 3 4 Why How Issues Revising a budget or Standard cost
Planning and operational variances for sales 3
Planning and operational variance for material 4
Planning and operational variance for labour

4. Why
Sales –Size of market—An unexpected change in economic conditions OR an unexpected technological change OR a radical change in customer attitudes OR unexpected new regulations affecting the marketability of a product…
Standard cost of materials—A major change in the market…
Standard quantity of material—An unexpected change in the product specification…
Standard labour rate –An unexpected increase in pay rates for employees…
Standard time—Unexpected reasons…

5. How Total variances Original budget Planning variances Revised budget
Operational variances
Actual results

6. Non-Controllable Not be made responsible
Controllable Be made responsible and accountable

7. Independent evidence and verifiable evidence
Issues
All the reported operational variances become favourable variances.
Adverse variances is attributable entirely to planning variances.
Independent evidence and verifiable evidence

8. 1 2 3 4 Planning and operational variances for sales
Revising a budget or
Standard cost 2
Planning and operational variances for sales 3
Planning and operational variance for material 4
Planning and operational variance for labour

9. Planning and operational variances for sales volume
Sales volume planning variances:
Sales volume operational variances:
Market size variances
市场规模差异
This is the difference in profit caused by the difference between the original sales budget and the revised sales budget.
Market share variances
市场份额差异
This is the difference in profit caused by the difference between actual sales volume and the sales volume in the revised sales budget.

10. Sales price planning variances Sales price operational variances
Planning and operational variances for sales price
Sales price planning variances
The sales price planning variance is generally outside the control of sales management.
Sales price operational variances
The sales price operational variance is a sales management responsibility.

11. 1 2 3 4 Planning and operational variance for material
Revising a budget or
Standard cost 2
Planning and operational variances for sales 3
Planning and operational variance for material 4
Planning and operational variance for labour

12. Material Usage per unit
Planning and Operational Variance
Direct Materials
Material Price
Material Usage per unit

13. Material Usage variance(operational):
Material Price Planning Variance=Actual usage×(Original standard price-Revised standard price)
Material usage planning variance=Actual units'usage in(Original standard-Revised standard)×Original standard price
Material price operational variance=Actual unit should cost(revised standard)-Actual cost
Material Usage variance(operational):
1..Material Usage variance in kg=Revised Standard material usage at actual production-Actual material usage
2.Material Usage Variance=Material Usage variance in kg×Original standard price per kg

14. 1 2 3 4 Planning and operational variance for labour
Revising a budget or
Standard cost 2
Planning and operational variances for sales 3
Planning and operational variance for material 4
Planning and operational variance for labour

15. Planning and operational variances for labour
labour rate per hour
labour time per unit

16. Question
Labour rate planning variance=(original standard rate-revised standard rate)×actual hours
Labour efficiency planning variance=Actual units(Original standard hours-Revised standard hour)×Original standard rate
Labour rate operational variance=Actual hours should cost(revised standard)-Actual cost
Labour efficiency operational variance=(Actual units' production hour(revised standard)-Actual hours)×Original standard rate per hour

17. !
THANKS!