When the volume variance of product #2 was being calculated, volume difference between actual and budget was multiplied with the budgeted price. If product #2 is the only product that the company sells, there would not be any mix effect because for both actual and budget the mix would be %100. The Rate Variance measures the way interest income (or expense) was affected because the actual rate earned on an account was different than the budgeted rate. In the above example, the actual rate was higher than the budgeted rate. Sales Variance. where ‘P’ is for Price Variance, and ‘V’ is for Volume Variance. ‘T’ for Quantity and ‘M’ is for Mix. If we calculate our variances correctly, the sum of Price and Volume variances should be equal to the total change in Profit Margin (excluding the impact of Cost variances). Sales Volume Variance is the measure of change in profit or contribution as a result of the difference between actual and budgeted sales quantity. Sales volume variance should be calculated using the standard profit per unit in case of absorption costing whereas in case of marginal costing system, standard contribution per unit is to be applied. The cost variance formula is usually comprised of two elements, which are: Volume variance. This is the difference in the actual versus expected unit volume of whatever is being measured, multiplied by the standard price per unit. Price variance. This is the difference between the actual versus expected price of whatever is being measured, multiplied by the standard number of units. I am having a lot of trouble conceptually understanding the formulas behind a rate / volume analysis for changes to a bank's balance sheet. I know this is just a specific application of a more general question (apportioning change to different factors) but this is the application within which I am working.

## To calculate sales volume variance, subtract the budgeted quantity sold from the actual quantity sold and multiply by the standard selling price. For example, if a

Definition of fixed production overhead volume variance: The difference between Both the budgeted and actual overhead are multiplied by the overhead rate. DM price variance = (Actual Price -Standard Price) X Actual Quantity pruchased 2 . DL efficiency variance = (Actual labor rate - Standard Hours Allowed) x This calculation is based on the rate of absorption that has been used in the context to absorb total overheads. Absorption based on output (units). Absorbed Cost A standard quantity is predetermined and standard price per unit is estimated. Budgeted cost is calculated by using standard cost. Record the actual cost. the controllable overhead variance and the overhead volume variance? A. Overhead applied to production using the predetermined overhead rate B. Flexible A volume variance is the difference between the actual quantity sold or consumed and the budgeted amount expected to be sold or consumed, multiplied by the standard price per unit. This variance is used as a general measure of whether a business is generating the amount of unit volume for which it had planned.

### Price) − (Actual Quantity used × Actual Price). Material Price Variance Variance . (Actual Hours worked × Variable Overhead. Absorption Rate) − Actual

Definition of fixed production overhead volume variance: The difference between Both the budgeted and actual overhead are multiplied by the overhead rate.