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.

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

Patterns in this topic

The exam re-skins the same archetypes. Recognize these here, then drill them in the Pattern Lab.

The Variance EngineBuild the three-column model, split price from quantity, and label each variance favorable or unfavorable by its effect on income.

Exam tip

Study smarter: before you expand each card, cover the screen and try to recall what the concept means from its title alone. Retrieving it from memory builds the recall the exam actually tests, and it beats re-reading.