Suppose you are in 12th
class. You dreamed of getting 95% in all 5 subjects.(It is called setting
up standards).
You worked very hard but you got only 90% in aggregate. Now this difference 5% is variance as per standard costing. (Variance means difference between “what should happen” and “What actually happened”. Likewise you may calculate variance for each subject e.g. English, Math, Accounts, Economics and Business Management.
You worked very hard but you got only 90% in aggregate. Now this difference 5% is variance as per standard costing. (Variance means difference between “what should happen” and “What actually happened”. Likewise you may calculate variance for each subject e.g. English, Math, Accounts, Economics and Business Management.
(Material variances, labour variances,
Variable Overhead variances, Fixed Overhead variance and Sales variances are
calculated under standard costing).