To gain strong command over Variance Analysis & Standard Costing (US CMA Part 1 & ACCA. foundation. Management Accounting), you must follow a fixed thinking sequence. Examiner does NOT test calculations alone — it tests logic, linkage, cause–effect, and responsibility.

Below is a step-by-step mastery framework + must-remember bullet points exactly aligned with CMA exam thinking.

STEP 1️⃣ Fix the BIG PICTURE (Most Important)

Always remember this flow:

Standard Cost → Actual Cost → Variance → Cause → Responsibility → Control

If you miss cause or responsibility, you lose CMA marks even if calculation is right.

STEP 2️⃣ Memorize the VARIANCE TREE (Visual Logic)

A. Material Variances

Material Cost Variance
├── Price Variance
└── Quantity (Efficiency) Variance
     ├── Mix Variance
     └── Yield Variance

B. Labor Variances

Labor Cost Variance
├── Rate Variance
└── Efficiency Variance

C. Overhead Variances

Variable OH
├── Spending Variance
└── Efficiency Variance

Fixed OH
├── Spending (Budget) Variance
└── Volume Variance

STEP 3️⃣ Standard CMA FORMULAS (Don’t Overthink)

Material

Price Variance = AQ × (AP − SP)
Quantity Variance = SP × (AQ − SQ)

Labor

Rate Variance = AH × (AR − SR)
Efficiency Variance = SR × (AH − SH)

Variable Overhead

Spending = AH × (AR − SR)
Efficiency = SR × (AH − SH)

Fixed Overhead

Spending = Actual FOH − Budgeted FOH
Volume = Budgeted FOH − Applied FOH

🔑 Exam Tip: CMA often gives partial data → derive missing figures.

STEP 4️⃣ RESPONSIBILITY MATRIX (CMA Favorite)

Variance	Responsible
Material Price	Purchasing
Material Quantity	Production
Labor Rate	HR / Labor market
Labor Efficiency	Production
Variable OH Spending	Department manager
Fixed OH Volume	Capacity utilization

⚠️ Exam trap: Uncontrollable ≠ Not reported

STEP 5️⃣ UNDERSTAND FAVOURABLE vs UNFAVOURABLE LOGIC

Cost Variance

Actual < Standard → Favorable
Actual > Standard → Unfavorable

But…

Favorable ≠ Good (quality may suffer)
Unfavorable ≠ Bad (volume increase)

🔑 CMA tests interpretation, not emotion.

STEP 6️⃣ MASTER MIX & YIELD (High-Scoring Area)

When used?

Multiple materials
Standard mix exists

Logic

Mix variance → Input proportions
Yield variance → Output efficiency

🔑 Yield variance uses total input & output relationship

STEP 7️⃣ FLEXIBLE BUDGET THINKING (Critical)

Always ask:

Is variance due to price or efficiency?
Should cost change with activity?

Variable cost → Flexible budget

Fixed cost → Static budget

STEP 8️⃣ LINK VARIANCES TO EACH OTHER (CMA Logic)

Labor efficiency ↓ → Variable OH efficiency ↓
Poor material quality → Labor efficiency variance
High sales volume → Fixed OH volume variance (Favorable)

Examiner loves cause–effect chains.

STEP 9️⃣ PRACTICE “THINK FIRST – CALCULATE LATER”

Before calculation, ask:

What variance?
What changed? (Rate, quantity, time, volume?)
Who controls it?
Is it controllable?
Short-run or long-run issue?

STEP 🔟 LAST-DAY REVISION CHECKLIST

✔️ Variance tree
✔️ Responsibility mapping
✔️ Favorable vs unfavorable logic
✔️ Flexible vs static budget
✔️ Mix vs yield clarity
✔️ Cause–effect linkages

FINAL CMA EXAM STRATEGY

Eliminate irrelevant numbers
Focus on standard allowed vs actual used
Watch capacity level in fixed OH
Never assume favorable = good

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1️⃣ SALES VARIANCES (VERY HIGH EXAM WEIGHT)

A. Sales Value Variance

Sales Value Variance
= Actual Sales – Budgeted Sales

B. Sales Price Variance

= AQ × (AP – SP)

➡️ Controlled by Marketing / Market conditions

C. Sales Volume Variance

= SP × (AQ – SQ)

SALES MIX & SALES YIELD (Multi-product)

Sales Mix Variance

Caused by change in sales proportions

= (Actual Mix – Standard Mix) × Standard Contribution / Price

Sales Yield Variance

Caused by total quantity change

= (Actual Total Qty – Standard Total Qty) × Weighted Avg Contribution

🔑 CMA logic

Mix → WHAT was sold
Yield → HOW MUCH was sold

2️⃣ MIX VARIANCE vs YIELD VARIANCE (INPUT SIDE)

MATERIAL MIX VARIANCE

Wrong proportions of materials

MATERIAL YIELD VARIANCE

Difference between actual output vs expected output

🔑 Key CMA Link

Poor material mix → Poor yield → Labor efficiency variance

3️⃣ COST VARIANCES: ABSORPTION vs VARIABLE COSTING ⭐⭐⭐

A. Under VARIABLE COSTING

Only variable production costs are inventoried

Variances calculated for:

Direct material
Direct labor
Variable overhead

✔️ NO fixed overhead volume variance

B. Under ABSORPTION COSTING

Fixed Overhead Variances exist:

Spending (Budget) variance
Volume variance

Income difference caused by:

Change in inventory × Fixed OH rate

🔑 CMA Exam Rule

Inventory ↑ → Absorption profit ↑
Inventory ↓ → Variable profit ↑

4️⃣ TWO-WAY VARIANCE ANALYSIS

Used when:

Single cause focus
Simpler control

Example: Direct Material

Material Cost Variance
= Price Variance + Quantity Variance

✔️ Common in intro questions

5️⃣ THREE-WAY VARIANCE ANALYSIS (CMA FAVORITE)

A. Variable Cost (DM / DL / VOH)

Total Variance
= Rate (Spending) Variance
+ Efficiency Variance

B. Sales Variance (Contribution Approach)

Sales Value Variance
= Sales Price Variance
+ Sales Volume Variance

🔑 CMA prefers contribution-based sales variance

6️⃣ FOUR-WAY VARIANCE ANALYSIS ⭐⭐⭐⭐

A. Variable Cost – 4 Way

Total Variance =
Rate Variance
+ Mix Variance
+ Yield Variance
+ Efficiency Variance

B. Sales – 4 Way (Advanced CMA)

Sales Value Variance =
Sales Price Variance
+ Sales Mix Variance
+ Sales Quantity Variance
+ Sales Yield Variance

🔑 Used in multi-product + limiting factor questions

7️⃣ ABSORPTION COSTING – FULL VARIANCE STRUCTURE

Total Absorption Cost Variance
├── Variable Cost Variance
│   ├── Rate
│   └── Efficiency
└── Fixed OH Variance
    ├── Spending
    └── Volume

8️⃣ EXAM TRAPS YOU MUST AVOID 🚫

❌ Mixing contribution & absorption sales variance
❌ Ignoring mix when multiple products exist
❌ Assuming favorable = good
❌ Missing fixed OH volume variance in absorption costing
❌ Using budgeted instead of standard data

9️⃣ LAST-DAY REVISION BULLETS (MEMORIZE)

✔️ Mix → Proportion
✔️ Yield → Quantity
✔️ Absorption → Inventory effect
✔️ Variable → Sales driven profit
✔️ 2-way = Cost focus
✔️ 3-way = Rate + Efficiency
✔️ 4-way = Deep CMA analysis

🔟 CMA EXAM STRATEGY

Identify single vs multi-product
Identify absorption or variable
Identify input side or output side
Choose 2 / 3 / 4-way analysis
THEN calculate

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CAUSES & REMEDIES FOR UNFAVORABLE, FAVOURABLE VARIANCES....

This is a classic US CMA Part 1 theory-plus-logic area.
CMA MCQs often ask “Which of the following is MOST likely cause?” or
“What corrective action should management take?”

Below is a complete cause → effect → remedy matrix, written exactly in CMA exam language.

1️⃣ MATERIAL VARIANCES

A. UNFAVOURABLE Material PRICE Variance (MPV)

(Actual price > Standard price)

Causes

Purchase in small quantities (loss of bulk discount)
Supplier price increase
Poor vendor negotiation
Rush / emergency purchase
Higher freight or handling cost
Change in supplier

Remedies (Management Accountant)

Long-term supplier contracts
Better vendor evaluation
Centralized purchasing
Economic order quantity (EOQ)
Standard price revision (if permanent)

B. FAVOURABLE Material PRICE Variance

Causes

Bulk purchase discounts
Lower-quality material purchased
Favorable market conditions
Strong negotiation

⚠️ CMA trap: Favorable MPV may cause unfavorable efficiency variance

Remedies

Quality inspection controls
Link purchasing with production feedback
Life-cycle costing review

C. UNFAVOURABLE Material EFFICIENCY (Quantity) Variance (MQV)

(Actual quantity > Standard quantity)

Causes

Inferior quality material
Excess scrap or spoilage
Poor supervision
Inaccurate standards
Machine inefficiency
Untrained labor

Remedies

Improve material quality
Strengthen production controls
Revise standards
Employee training
Better maintenance

D. FAVOURABLE Material EFFICIENCY Variance

Causes

Higher quality material
Skilled labor
Better production methods
Improved technology

⚠️ May increase material price variance

Remedies

Cost–benefit analysis
Continuous improvement benchmarking

2️⃣ LABOUR VARIANCES

A. UNFAVOURABLE Labour RATE Variance (LRV)

(Actual rate > Standard rate)

Causes

Overtime premium
Use of skilled labor instead of standard
Wage rate increase
Labor union pressure
Poor labor scheduling

Remedies

Better workforce planning
Control overtime
Use standard skill mix
Wage renegotiation (long run)

B. FAVOURABLE Labour RATE Variance

Causes

Use of lower-skilled workers
Lower wage rates
Reduced overtime

⚠️ May cause unfavourable efficiency variance

Remedies

Balance skill level vs productivity
Monitor quality output

C. UNFAVOURABLE Labour EFFICIENCY Variance (LEV)

(Actual hours > Standard hours)

Causes

Poor training
Low morale
Inferior material
Machine breakdown
Poor supervision

Remedies

Training programs
Motivation & incentives
Maintenance planning
Quality input control

D. FAVOURABLE Labour EFFICIENCY Variance

Causes

Skilled workforce
Automation
Good supervision
Better work methods

Remedies

Standard revision
Best-practice sharing

3️⃣ VARIABLE OVERHEAD VARIANCES

A. UNFAVOURABLE Variable OH SPENDING Variance

Causes

Higher indirect material cost
Higher utility rates
Inflation
Inefficient purchasing

Remedies

Cost control systems
Budget revision
Energy efficiency initiatives

B. FAVOURABLE Variable OH SPENDING Variance

Causes

Cost-saving measures
Lower indirect material prices
Efficient resource usage

⚠️ Check for quality compromise

Remedies

Sustainability analysis
Standard reset if permanent

C. UNFAVOURABLE Variable OH EFFICIENCY Variance

Causes

Poor labor efficiency
Idle time
Machine downtime
Poor scheduling

🔑 Linked to labor efficiency variance

Remedies

Improve production scheduling
Preventive maintenance
Workflow redesign

D. FAVOURABLE Variable OH EFFICIENCY Variance

Causes

Improved labor productivity
Automation
Better capacity utilization

Remedies

Process standardization
Capacity planning

4️⃣ FIXED OVERHEAD VARIANCES

A. UNFAVOURABLE Fixed OH SPENDING Variance

Causes

Higher fixed costs (rent, salaries)
Poor budget estimation
Unexpected repairs
Inflation

Remedies

Budgetary control
Long-term cost contracts
Review fixed cost structure

B. FAVOURABLE Fixed OH SPENDING Variance

Causes

Cost-cutting
Deferred maintenance
Lower fixed expenses

⚠️ Deferred costs may hurt future periods

Remedies

Life-cycle costing
Prevent cost deferral distortion

C. UNFAVOURABLE Fixed OH VOLUME Variance

Causes

Low production volume
Underutilized capacity
Reduced demand

🔑 Capacity issue, not cost control

Remedies

Increase demand
Capacity rationalization
Outsourcing excess capacity

D. FAVOURABLE Fixed OH VOLUME Variance

Causes

High production volume
Better capacity utilization

⚠️ May increase inventory (absorption costing)

Remedies

Inventory management review
Avoid overproduction

5️⃣ SALES VARIANCES

A. UNFAVOURABLE Sales PRICE Variance

Causes

Price discounts
Intense competition
Poor pricing strategy

Remedies

Market analysis
Value-based pricing
Cost leadership review

B. FAVOURABLE Sales PRICE Variance

Causes

Strong brand
Market demand
Effective sales strategy

Remedies

Demand sustainability analysis

C. UNFAVOURABLE Sales VOLUME Variance

Causes

Lower demand
Poor marketing
Supply constraints

Remedies

Improve marketing mix
Expand distribution
Product redesign

D. FAVOURABLE Sales VOLUME Variance

Causes

Strong demand
Successful promotions
Market expansion

⚠️ Check capacity & margin impact

Remedies

Capacity expansion planning
Margin protection strategies

🔑 CMA EXAM GOLDEN RULES

✔️ Favorable ≠ Good
✔️ Unfavorable ≠ Bad
✔️ Variances are signals, not judgments
✔️ Always link cause → responsibility → corrective action

🎯 LAST-DAY MEMORY HACK

Price/Rate → Purchasing / HR
Efficiency → Production
Spending → Department manager
Volume → Capacity utilization
Sales → Marketing

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CASE-BASED QUESTIONS (mini caselets) on standard costing, variances, absorption vs variable costing, and sales variances.
Each case tests cause–effect–responsibility–decision, exactly like the real exam.

📌 CASE 1: Material Price & Efficiency (Linked Variances)

Case:
ABC Ltd. experienced a favourable material price variance after switching to a new supplier. However, production reported an unfavourable material efficiency variance in the same month.

Question:
Which is the MOST likely explanation?

Options:
A. Purchasing negotiated better prices without affecting quality
B. Production inefficiency due to poor supervision
C. Lower-quality material increased usage
D. Standard quantity was set too high

✅ Answer: C

CMA Logic:
Favourable price often comes from lower-quality inputs, which increase usage → unfavourable efficiency. CMA loves this linkage.

📌 CASE 2: Labour Rate vs Labour Efficiency

Case:
XYZ Manufacturing used lower-paid temporary workers to reduce costs. The company reported a favourable labour rate variance but an unfavourable labour efficiency variance.

Question:
What is the best interpretation?

A. Labour standards were inaccurate
B. Temporary workers lacked skills
C. Overtime premium increased
D. Production volume increased

✅ Answer: B

CMA Logic:
Lower wages → favourable rate
Lower skill → unfavourable efficiency
Favourable ≠ good (key exam theme).

📌 CASE 3: Variable Overhead Efficiency Variance

Case:
During a period of machine breakdowns, a company reported an unfavourable variable overhead efficiency variance.

Question:
Which variance is MOST likely also unfavourable?

A. Fixed overhead spending variance
B. Sales price variance
C. Labour efficiency variance
D. Fixed overhead volume variance

✅ Answer: C

CMA Logic:
Variable OH efficiency is driven by labour hours → linked directly to labour efficiency variance.

📌 CASE 4: Fixed Overhead Volume Variance

Case:
A firm operated at 70% of practical capacity due to weak demand. Fixed costs were exactly as budgeted.

Question:
Which variance will occur?

A. Favourable spending variance
B. Unfavourable spending variance
C. Favourable volume variance
D. Unfavourable volume variance

✅ Answer: D

CMA Logic:
Low capacity utilization → unfavourable FOH volume variance
This is a capacity issue, not cost control.

📌 CASE 5: Absorption vs Variable Costing (Profit Difference)

Case:
Inventory increased during the year. Fixed manufacturing overhead was ₹10 per unit.

Question:
Compared to variable costing, absorption costing profit will be:

A. Lower by ₹10 per unit
B. Higher by ₹10 per unit
C. Equal
D. Lower due to higher fixed costs

✅ Answer: B

CMA Logic:
Inventory ↑ → fixed OH deferred in inventory → absorption profit higher.

📌 CASE 6: Sales Mix Variance

Case:
A company sells Products A and B. Product A has a higher contribution margin. Actual sales shifted toward Product B.

Question:
Impact on sales variances?

A. Favourable sales mix variance
B. Unfavourable sales mix variance
C. Favourable sales yield variance
D. No impact

✅ Answer: B

CMA Logic:
Selling more of lower-margin product → unfavourable mix.

📌 CASE 7: Sales Price vs Sales Volume

Case:
To increase market share, management reduced selling prices. Sales units increased significantly.

Question:
Which combination is MOST likely?

A. Favourable price, unfavourable volume
B. Unfavourable price, favourable volume
C. Both favourable
D. Both unfavourable

✅ Answer: B

CMA Logic:
Price cut → unfavourable price variance
Higher units → favourable volume variance

📌 CASE 8: Management Action (Remedy Question)

Case:
The firm reports recurring unfavourable material efficiency variances due to excessive scrap.

Question:
What is the BEST corrective action?

A. Renegotiate material prices
B. Increase selling price
C. Improve production supervision and training
D. Ignore variance as uncontrollable

✅ Answer: C

CMA Logic:
Efficiency issues → production control, not purchasing or pricing.

📌 CASE 9: Fixed OH Spending Variance

Case:
Actual fixed overhead exceeded budget due to unplanned equipment repairs.

Question:
Which variance occurred and who is responsible?

A. Volume variance – Production
B. Spending variance – Management
C. Efficiency variance – HR
D. Spending variance – Marketing

✅ Answer: B

CMA Logic:
Unexpected fixed cost → spending variance, responsibility = management.

📌 CASE 10: Big CMA Integrative Case (Elimination Type)

Case:
A company reports:

Favourable labour rate variance
Unfavourable labour efficiency variance
Unfavourable variable OH efficiency variance

Question:
Which is the MOST reasonable conclusion?

A. Labour standards are too strict
B. Use of unskilled labour reduced wages but productivity
C. Sales demand declined
D. Fixed overhead was overabsorbed

✅ Answer: B

CMA Logic:
Low wage → favourable rate
Low productivity → unfavourable efficiency
VOH efficiency follows labour hours.

🎯 HOW CMA EXPECTS YOU TO ANSWER CASE QUESTIONS

Identify variance type
Identify cause (price / rate / efficiency / volume)
Link related variances
Identify responsibility center
Choose most logical, not emotional answer

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ILLUSTRATION on Reverse Ratio (Back-calculation) in Variance Analysis.

These questions are very common and very tricky because CMA gives variances first and asks you to reconstruct standards or actuals.

🔁 WHAT IS “REVERSE RATIO” IN CMA?

👉 Instead of calculating variance from data,
you calculate data from variance.

CMA tests:

Logical rearrangement
Understanding of formulas
Not blind memorization

🔹 ILLUSTRATION 1: MATERIAL PRICE VARIANCE (Reverse)

Case:

A company reports a Material Price Variance of ₹4,000 Unfavourable.
Actual quantity of material purchased = 8,000 kg.
Standard price = ₹20 per kg.

Question:

What was the Actual Price per kg?

Step-by-step CMA Logic:

Formula:

Material Price Variance = AQ × (AP − SP)

Substitute:

4,000 (U) = 8,000 × (AP − 20)

Solve:

AP − 20 = 0.50
AP = ₹20.50 per kg

✅ Answer: ₹20.50 per kg

🔑 CMA tip:
Unfavourable → Actual price higher than standard.

🔹 ILLUSTRATION 2: MATERIAL EFFICIENCY VARIANCE (Reverse)

Case:

Material Efficiency Variance = ₹3,600 Favourable
Standard price = ₹30 per kg
Actual quantity used = 1,100 kg

Question:

What was the Standard Quantity allowed?

Solution:

Formula:

Material Efficiency Variance = SP × (AQ − SQ)

Since variance is Favourable, AQ < SQ

3,600 = 30 × (SQ − 1,100)

SQ − 1,100 = 120
SQ = 1,220 kg

✅ Answer: Standard Quantity = 1,220 kg

🔹 ILLUSTRATION 3: LABOUR RATE VARIANCE (Reverse)

Case:

Labour Rate Variance = ₹1,500 Unfavourable
Actual hours worked = 750 hours
Standard rate = ₹18 per hour

Question:

Find the Actual Labour Rate.

Solution:

Formula:

LRV = AH × (AR − SR)

1,500 = 750 × (AR − 18)

AR − 18 = 2
AR = ₹20 per hour

✅ Answer: ₹20 per hour

🔹 ILLUSTRATION 4: LABOUR EFFICIENCY VARIANCE (Reverse)

Case:

Labour Efficiency Variance = ₹2,400 Unfavourable
Standard rate = ₹16 per hour
Standard hours allowed = 1,500 hours

Question:

What were the Actual Hours Worked?

Solution:

Formula:

LEV = SR × (AH − SH)

2,400 = 16 × (AH − 1,500)

AH − 1,500 = 150
AH = 1,650 hours

✅ Answer: Actual hours = 1,650

🔹 ILLUSTRATION 5: VARIABLE OVERHEAD SPENDING VARIANCE (Reverse)

Case:

Variable OH Spending Variance = ₹900 Favourable
Actual hours = 300 hours
Standard VOH rate = ₹6 per hour

Question:

What was the Actual VOH Rate per hour?

Solution:

Formula:

VOH Spending Variance = AH × (AR − SR)

Favourable → Actual < Standard

900 = 300 × (6 − AR)

6 − AR = 3
AR = ₹3 per hour

✅ Answer: ₹3 per hour

🔹 ILLUSTRATION 6: FIXED OVERHEAD VOLUME VARIANCE (Reverse)

Case:

Fixed OH Volume Variance = ₹10,000 Unfavourable
Budgeted Fixed OH = ₹50,000
Standard production = 10,000 units

Question:

What was the Actual Production (units)?

Solution:

FOH rate per unit:

50,000 ÷ 10,000 = ₹5 per unit

Formula:

FOH Volume Variance = FOH Rate × (Actual − Standard units)

Unfavourable → Actual < Standard

10,000 = 5 × (10,000 − Actual)

10,000 − Actual = 2,000
Actual = 8,000 units

✅ Answer: Actual production = 8,000 units

🔑 CMA EXAM SHORTCUT FOR REVERSE QUESTIONS

1️⃣ Identify variance type
2️⃣ Write standard formula
3️⃣ Replace variance with ₹ value + F/U logic
4️⃣ Solve algebraically
5️⃣ Sanity-check direction (F or U)

🚨 COMMON CMA TRAPS

❌ Forgetting sign (F vs U)
❌ Using SH instead of AH
❌ Mixing absorption & variable concepts
❌ Using budgeted instead of standard figures

🎯 FINAL EXAM TIP

If CMA gives variance first → STOP → Write formula → Think direction → THEN calculate

Sunday, December 28, 2025

How to gain command over topic Variance Analysis or Standard Costing?

STEP 1️⃣ Fix the BIG PICTURE (Most Important)

STEP 2️⃣ Memorize the VARIANCE TREE (Visual Logic)

A. Material Variances

B. Labor Variances

C. Overhead Variances

STEP 3️⃣ Standard CMA FORMULAS (Don’t Overthink)

Material

Labor

Variable Overhead

Fixed Overhead

STEP 4️⃣ RESPONSIBILITY MATRIX (CMA Favorite)

STEP 5️⃣ UNDERSTAND FAVOURABLE vs UNFAVOURABLE LOGIC

Cost Variance

But…

STEP 6️⃣ MASTER MIX & YIELD (High-Scoring Area)

When used?

Logic

STEP 7️⃣ FLEXIBLE BUDGET THINKING (Critical)

Variable cost → Flexible budget

Fixed cost → Static budget

STEP 8️⃣ LINK VARIANCES TO EACH OTHER (CMA Logic)

STEP 9️⃣ PRACTICE “THINK FIRST – CALCULATE LATER”

STEP 🔟 LAST-DAY REVISION CHECKLIST

FINAL CMA EXAM STRATEGY

1️⃣ SALES VARIANCES (VERY HIGH EXAM WEIGHT)

A. Sales Value Variance

B. Sales Price Variance

C. Sales Volume Variance

SALES MIX & SALES YIELD (Multi-product)

Sales Mix Variance

Sales Yield Variance

2️⃣ MIX VARIANCE vs YIELD VARIANCE (INPUT SIDE)

MATERIAL MIX VARIANCE

MATERIAL YIELD VARIANCE

3️⃣ COST VARIANCES: ABSORPTION vs VARIABLE COSTING ⭐⭐⭐

A. Under VARIABLE COSTING

Variances calculated for:

B. Under ABSORPTION COSTING

Fixed Overhead Variances exist:

Income difference caused by:

4️⃣ TWO-WAY VARIANCE ANALYSIS

Used when:

Example: Direct Material

5️⃣ THREE-WAY VARIANCE ANALYSIS (CMA FAVORITE)

A. Variable Cost (DM / DL / VOH)

B. Sales Variance (Contribution Approach)

6️⃣ FOUR-WAY VARIANCE ANALYSIS ⭐⭐⭐⭐

A. Variable Cost – 4 Way

B. Sales – 4 Way (Advanced CMA)

7️⃣ ABSORPTION COSTING – FULL VARIANCE STRUCTURE

8️⃣ EXAM TRAPS YOU MUST AVOID 🚫

9️⃣ LAST-DAY REVISION BULLETS (MEMORIZE)

🔟 CMA EXAM STRATEGY

1️⃣ MATERIAL VARIANCES

A. UNFAVOURABLE Material PRICE Variance (MPV)

Causes

Remedies (Management Accountant)

B. FAVOURABLE Material PRICE Variance

Causes

Remedies

C. UNFAVOURABLE Material EFFICIENCY (Quantity) Variance (MQV)

Causes

Remedies

D. FAVOURABLE Material EFFICIENCY Variance

Causes

Remedies

2️⃣ LABOUR VARIANCES

A. UNFAVOURABLE Labour RATE Variance (LRV)

Causes

Remedies

B. FAVOURABLE Labour RATE Variance

Causes

Remedies

C. UNFAVOURABLE Labour EFFICIENCY Variance (LEV)

Causes

Remedies

D. FAVOURABLE Labour EFFICIENCY Variance

Causes