The difference between wages and gross pay calculated for employee.The payroll variance is the difference between the labor cost employees charge on their timesheets and the gross pay that is actually paid.
A budget is generally a list of all planned expenses and revenues.The budget is helpful for an organization plan for saving and spending for the near future.
The variance is the deviation of actual from the standard.
Variance analysis is the analysis of the difference between planned and the actual numbers.The sum of all variances gives a clear a picture of the over-all over performance and the under-performance for a particular reporting period.
Budget variance occurs when an actual amount is different from a planned or budgeted amount.Most of the budget analysts calculate the budget variance by substracting the budget figure from the actual spending figure.
The primary objective of variance analysis is to control cost and cost reduction.
The budget variance can be classified as follows:
According to the basis elements of cost
*Material cost variance :
Is the difference between the actual cost of materials used and the standard cost for the actual output
*Labour variance :
a.Labor cost variance
Is the difference between the actual direct wages paid and the direct labour cost allowed for the actual output to be achieved
b.Labor Rate (of pay) variance
Is the difference between the standard rate specified and the actual rate paid
c.Total labour efficiency variance
Is the difference between the standard labor cost of standard time for actual output and standard cost of actual time paid for
d.Labour efficiency variance:
Is the portion of labor cost variance which arises due to the difference between the standard labour hours specified for the output achieved and the hours spent
*Overhead variance
Is the difference between the standard cost of overhead allowed for actual output and the actual overhead cost incurred
According to the basis of controllability
*Controllable variance:
When the variance is controllable whenever an individual or a department or may be held responsible for that variance
*Uncontrollable variance:
Is the variance for which a particular person or a particular person or a specific department or the section cannot be held responsible.
According to the basis of impact
*Favorable Variance :
The actual costs are lower than the standard costs at per-determined level of activity
*Unfavorable variance:
When the actual costs are more than the standard cost at predetermined level of activity
According to the basis of nature
*Basis variance:
The variance which arise on account of monetary rates/factors
*sub-variance :
The variances arising due to non-monetary factors
In the present scenario we can see the Labor Rate Variance,ie Direct Labour Rate Variance
A.It is the measure of difference between the actual cost of direct labour and the standard cost of direct labor utilized during a period.
We can calculate the Direct Labour Rate Variance is :
Actual Cost - Standard Cost of the Actual hours
*Step 1
Actual hours = 1470 charts x 3.50 per chart
=5145 hours
*Step 2
Actual Cost = Actual hours x Actual rate
=5145 hours x 3.50 per chart
=$18007.5 ie,$18008
*Step 3
Standard Cost = they have given as $5145.00
Step 4
Labor Rate Variance =Actual cost - Standard Cost of the Actual hours
=$18008 - $5145
=$12863
4.12 Payroll variance Subdomain VI.G.3 Explain budget variances Subdomain IV.A.3 Apply principles of healthcare finance for...
6.22 types of budget variances Subdomain VI.G.3 Explain budget variances Subdomain IVA.3 Apply principles of healthcare finance for revenue management following types of budget variances by indicating if they are temporaryl permanent and favorable/unfavorable. 1. $7,500.00 for outsourced coding services to address backlog 2. $12,500.00 as a result of Assistant Director laid off in November 3. $500 for new computer needed to replace one that quit and was not repairable 4. $4,000.00 1st quarter record destruction postponed a quarter due...
Subdomain IV.A.3 Apply principles of healthcare finance for revenue management Identify the following types of bu dget variances by indicating if they are temporaryl nent and favorable/unfavorable. 1. $7,500.00 for outsourced coding services to address backlog 2. $12,500.00 as a result of Assistant Director laid off in November 3. $500 for new computer needed to replace one that quit and was not repairable 4. $4,000.00 1* quarter record destruction postponed a quarter due to staffing issues References Revoir, R. and...