Background Note | HBS Case Collection | 1995

Analyzing Standard Costs: Technical Note

by V.G. Narayanan

Abstract

Explains variance analysis. Concepts of price variance and quantity variance are introduced to analyze prime cost variances. Spending variance and capacity variance are used to analyze overhead variance. Consistent with conducting variance analysis in an activity-based costing setting. All concepts are illustrated graphically.

Keywords: Activity Based Costing and Management; Cost Accounting; Budgets and Budgeting; Cost Management; Cost; Cost of Capital; Measurement and Metrics; Performance Capacity; SWOT Analysis; Accounting Industry;

Citation:

Narayanan, V.G. "Analyzing Standard Costs: Technical Note." Harvard Business School Background Note 196-109, November 1995.