Standard Cost Variance Calculator

How it is calculated

The variance is the actual cost minus the standard cost: Variance = Actual − Standard, and the percentage is Variance ÷ Standard × 100, so it is measured against the standard, not against the actual figure. A positive variance means you spent more than planned and is labelled Unfavorable (over standard); a negative variance means you spent less and is labelled Favorable (under standard); zero is shown as On standard.

The two amounts can be per unit or totals for a batch or period, as long as both use the same basis and the same currency (shown in dollars). The standard cost must be greater than zero, otherwise no percentage can be given, and the actual cost cannot be negative. A negative variance is printed with the minus sign before the dollar sign, for example -$0.60. The tool does not split the variance into price and quantity (efficiency) parts, so for that you need the separate unit prices and quantities.

Common mistakes

• Reading "Favorable" as automatically good news. A lower cost may come from cheaper but poorer materials, or from skipped maintenance that will cost more later.
• Swapping the two inputs. The standard is the planned figure and the actual is what happened; reversing them flips the sign and the favorable/unfavorable label.
• Mixing a per-unit standard with a total actual cost. Comparing $12 per unit with $12,600 for a batch gives a meaningless huge variance, so use the same basis for both.
• Computing the percentage against the actual cost. Here it is divided by the standard cost, so 0.60 on a $12.00 standard is 5.00%, not 4.76%.
• Treating the variance as a cause. It only shows the size and direction of the gap; to find out whether price or usage caused it, you need a price and quantity breakdown.