CPA Exam Lab
Section 1: 40–50%B4

Variance Analysis

Exam Insight

Variance questions are formula-driven and frequently tested: examiners give standards and actuals and want a clean price/rate variance and a quantity/efficiency variance, with the correct favorable or unfavorable label. The signs and the price-vs-quantity split are where points are won or lost.

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What AICPA Wants You to Know

  • 1Compute direct materials price and quantity (usage) variances
  • 2Compute direct labor rate and efficiency variances
  • 3Compute variable overhead spending and efficiency variances
  • 4Compute fixed overhead budget (spending) and volume variances
  • 5Compute sales price and sales volume variances
  • 6Apply the favorable/unfavorable convention consistently