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Reviewed by CA Nikhil Gupta · Last reviewed 11 October 2026
Enter standard and actual quantities, rates and overheads to get eight variances and a bridge from standard cost to actual cost.
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Compute favourable and adverse material, labour, variable overhead and fixed overhead variances, including an exact standard-to-actual cost bridge.
For standard material of 500 kg at ₹20 and actual consumption of 520 kg at ₹22, material price variance is ₹1,040 adverse and material usage variance is ₹400 adverse. Total material variance is ₹1,440 adverse.
Use actual quantity times the difference between standard and actual price for material price variance. Material usage compares standard quantity for achieved output with actual consumption at standard price. Labour rate uses actual hours; efficiency variance compares standard hours with actual hours. Overhead variance calculations separate spending, efficiency and absorption.
Never compare a standard allowance for budgeted volume with actual costs for a different output without normalising the standard quantity. Fixed-overhead volume variance is based on standard hours absorbed and budgeted overhead, not necessarily capacity efficiency.
Start by reconciling actual output units to the production order and comparing recipe or bill-of-material quantities with inventory consumption. Investigate material price variances using supplier invoices, commodity indexes, procurement volume, freight and purchase dates. Labour efficiency deviations should be tied to job cards, downtime, rework, absenteeism and standard-hour setting. For overheads, distinguish controllable spending, usage and fixed-capacity effects. A favourable overall total does not negate an adverse quality-related material usage pattern. The output is a signed variance bridge rather than a replacement for the production cost ledger.
Production order, BOM version, standard rates approval, stores issue reports, purchase bills, job cards, overtime and payroll costing, machine-hour logs, overhead cost centre ledger.
Staff may be paid less per hour but take longer to deliver the same actual output. This page uses actual consumed quantity; purchase-price analysis requires purchase volumes separately. Not necessarily. Unusually low material costs might reflect quality compromises, and favourable volumes may mask under-absorption.
A favourable variance means actual cost was below standard (or output above standard); an adverse variance means the reverse. Both need a cause before action.
Because the variance compares what should have been used for the units actually produced, not for the budgeted volume.
From producing a different number of standard hours than the budget assumed; it is not a spending issue.
Rates and rules were checked against these sources on 11 October 2026. Notifications and standards change; confirm on the official site before you file, book or advise.
Educational working tool. Results follow the scope and assumptions above and the figures you enter; they are not tax, audit, legal or accounting advice. Tax and accounting treatment depends on facts and on the law or standard in force for the relevant period, so verify the official source or consult a professional before you rely on a result.
Background, worked examples and the rules behind these numbers.