}In budgetary control, we saw that variances were calculated by comparing the actual costs to the flexed budget cost. 

}In standard costing, variances are calculated in the same way, although more detailed variance analysis is possible.

}Total cost variances can be broken down to explain:

1.How much of it is caused by the usage of resources being different from the standard, and 

2.How much of it is caused by the price of resources being different from the standard.

}If resource price or usage is above standard, or if sales volume or selling price is below standard, an adversevariance will result.

}If resource price or usage is below standard, or if sales volume or selling price is above standard, a favourable variance will result.

}A variance is the difference between actual results and the budget or standard.

}Taken together, cost and sales variances can be used to explain the difference between the budgeted profit for a period and the actual profit.

}When actual results are better than expected results, a favourable (F)variance occurs.

}When actual results are worse than expected results, an adverse variance (A).