The variances, three ways of naming them
The arithmetic is the same in every syllabus; the names, the order of subtraction and the letters differ. Choose the syllabus above and every label, formula and key follows it.
| Variance | ICAI | ACCA | US texts |
|---|---|---|---|
| Price | (SP − AP) × AQ purchased | (SP − AP) × AQ purchased | (AP − SP) × AQ purchased |
| Usage or quantity | (SQ − AQ) × SP | (SQ − AQ) × SP | (AQ − SQ) × SP |
| Mix and yield | (RSQ − AQ) × SP; (SQ − RSQ) × SP | the same | signs reversed |
| Labour | rate, idle time, efficiency | rate, idle time, efficiency | rate, efficiency |
| Fixed overhead | expenditure, volume = capacity + efficiency | the same | spending, production volume |
| Direction | F or A | F or A | F or U |
An example from set EXSC25
Ganga Products Ltd allows 4.5 m of coated fabric per school bag at ₹52 per m. It made 3,180 bags, bought 19,340 m for ₹9,65,066 and used 15,600 m. AP = 9,65,066 ÷ 19,340 = ₹49.90, so the price variance on the quantity purchased is (52 − 49.90) × 19,340 = ₹40,614 (F). SQ = 3,180 × 4.5 = 14,310 m, so the usage variance is (14,310 − 15,600) × 52 = ₹67,080 (A). Purchases and usage differ, so the two are not added into one cost variance. Open set EXSC25
Questions
What do F and A mean in variance analysis?
F is favourable: better than standard, a lower cost or higher revenue. A is adverse (US books say U, unfavorable): a higher cost or lower revenue. Pick F or A beside the amount. A minus sign is read by the preset's formula: minus means adverse in ICAI and ACCA, but favorable on a US cost variance.
Is the material price variance worked on quantity purchased or used?
Either can be right, so each problem states its basis. Every preset here works it on the quantity purchased, as the ICAI study material and US texts do, and as ACCA questions do when raw material inventory is held at standard cost. With inventory held at actual cost it is worked on the quantity used.
What is RSQ in standard costing?
RSQ is the revised standard quantity: the actual total input split in the standard mix. The mix variance is (RSQ − AQ) × SP and the yield variance is (SQ − RSQ) × SP. Together they make the usage variance.
Why is the idle time variance always adverse?
Idle hours are paid for but produce nothing, so they can only add cost. The ICAI and ACCA presets value them at the standard rate and take them out of the efficiency variance, which then uses the hours actually worked.
How do the fixed overhead volume, capacity and efficiency variances fit together?
Under absorption costing the volume variance is (SH − BH) × the fixed overhead rate. It splits into capacity, (AH − BH) × rate, from working more or fewer hours than budgeted, and efficiency, (SH − AH) × rate, from taking more or fewer hours than standard.
How do you reconcile budgeted profit with actual profit?
Start from budgeted profit (in ICAI this is CA Final SCMPE material), add the sales volume variance at the standard profit per unit, then add every favourable variance and take off every adverse one. With no inventory changes the result equals actual revenue less actual costs.
Can I type amounts with Indian commas?
Yes. 1,00,000 reads as one lakh and 100,000 as one hundred thousand, in every preset. A rupee or dollar sign, Rs., /- and a trailing F or A are fine too. A minus sign or brackets are not accepted.
Sources, read 2 November 2026: ICAI Intermediate Paper 4 study material, chapter 13, Standard Costing (notation, price on purchases, mix, yield, idle time, overhead variances); ICAI Final SCMPE chapter 11, Standard Costing (reconciliation of budgeted and actual profit); ACCA, Materials mix and yield variances; OpenStax, Principles of Accounting volume 2, 8.2 materials variances and 8.4 overhead variances; Saylor Academy, Managerial Accounting, 10.8 fixed overhead variances.