All 38 Variance Analysis questions
More in Variance Analysis
How can variances be interdependent, and why does that matter? What are the limitations and criticisms of variance analysis and standard costing? How does variance analysis differ under marginal versus absorption costing? How do you calculate the fixed overhead capacity and efficiency variances? How do you compute and use a market size and market share variance? How do you reconcile standard cost of actual production to actual cost? How can variance analysis mislead in a JIT or lean environment? What is the total materials variance and how is it split, with a worked example? How does responsibility for variances get assigned across departments?
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Budgeting & Forecasting › Variance Analysis

How do you interpret an operating statement under marginal costing?

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Answer

Under marginal costing, the operating statement starts from budgeted contribution, applies the sales volume variance at standard contribution to get the flexed contribution, then the sales price and variable cost variances to get actual contribution, and finally deducts the fixed overhead (with only an expenditure variance) to reach actual profit.
Real-world example The marginal-costing operating statement reconciles budgeted to actual profit via contribution-based variances.

Common follow-ups: Why value volume variance at contribution here? | What fixed-overhead variance appears?

Flexible Budgets The Master Budget Variance Analysis
All 38 Variance Analysis questions