Performance Management · Planning and operational variances

How to Calculate Revised Standard Cost and Ex-Post Budgets

Updated 11 October 2026 · Fact-checked

A revised (ex-post) standard is the standard you would have set with hindsight, using actual market conditions. Flex the budget to actual output at these revised standards. Compare original with revised to find planning variances (uncontrollable). Compare revised with actual to find operational variances (controllable). Together they equal the total variance.

Understand Revising Standards and Ex-Post Budgets

A standard cost is set before the period starts. If the market then moves, for example a supplier raises prices, the original standard may no longer be a fair target. Judging the manager against it would blame them for something they could not control.

The fix is to ask: what would the standard have been if we had known the true conditions? That is the revised standard or ex-post standard. An ex-post budget is the budget flexed to actual output (or actual market size) using these revised standards.

This splits the total variance in two. The planning variance is the gap between the original standard and the revised standard. It measures the quality of the original plan, or the effect of external change. The operational variance is the gap between the revised standard and the actual result. It measures how well managers performed in the real conditions.

The original standard is not thrown away. You still need it to calculate the planning variance, and to reconcile back to the original budget or the total variance. Always use actual output for the quantities, so the comparison is like for like.

In the exam the revised figure is usually given, for example a new market price or a different usage because of a new material. Your job is to place it in the right step. Note that a revision must be justified by uncontrollable factors. Revising standards just because performance was poor defeats the purpose.

Key rules to remember

Revised (ex-post) standard: Revised standard = standard you would have set using actual market conditions; Usually given in the question, such as a revised price per kg or a revised market size.
Planning variance: Planning variance = original standard cost of actual output − revised standard cost of actual output; Adverse if the revised cost is higher (or revised profit lower). Same logic for revenue or contribution, with the sign reversed.
Operational variance: Operational variance = revised standard cost of actual output − actual cost; Adverse if actual cost is higher than the revised standard. For quantities, price the difference at the revised standard.
Operational usage or efficiency variance: (Revised standard quantity for actual output − actual quantity) × revised standard price; Price at the revised standard, not the original.
Operational price or rate variance: (Revised standard price − actual price) × actual quantity; Actual quantity purchased (or used for the labour rate).
Total variance check: Planning variance + operational variances = total variance against the original standard; Use this to check your answer. Mind the signs: Adverse items add together, Favourable items offset.
Ex-post sales volume: Ex-post budget volume = actual market size × budgeted market share; Planning sales volume variance = (original budget volume − ex-post volume) × standard contribution per unit, Adverse if ex-post is lower.

How to solve Revising Standards and Ex-Post Budgets questions

Use this order for any planning and operational variance question. It keeps the original and revised figures from getting mixed up.

1Read the question and mark which figures are original standards, which are revised, and which are actual.
2Decide the actual output (or actual market volume for sales). All standard quantities are based on this.
3Calculate the original standard cost (or contribution) of actual output.
4Calculate the revised standard cost of actual output using the revised price, usage or market size.
5Planning variance = original − revised for costs. Label Adverse if the revised cost is higher.
6Calculate operational variances: compare the revised standard with actual, pricing quantity differences at the revised standard.
7Add everything and check it reconciles to the total variance from original standard to actual. Comment on controllability if asked.

Quickest way: Three-line cost grid

When to use it: Use when the question gives original standard, revised standard and actual figures for one cost item and asks for a split of the variance.

Write three totals in a column: original standard cost of actual output, revised standard cost of actual output, actual cost.
The gap between the first two is the planning variance. The gap between the last two is the operational variance.
Split the operational gap into price and usage by working quantity × price differences, always at revised standard.
Total the first and last lines to prove the sum. If it does not match, a figure is on the wrong basis.

Common mistakes in Revising Standards and Ex-Post Budgets

Pricing the operational usage variance at the original standard price.
Students use the habit from basic variances and forget that the revised standard is now the benchmark.
Fix: Once you have a revised standard, every operational variance uses the revised price, rate or contribution.
Calculating the planning variance on budgeted output instead of actual output.
The original budget is based on budgeted units, so it feels natural to stay with them.
Fix: Both the original and revised costs must be for actual output. For sales volume, the units differ because the question is about volume.
Getting the sign of the planning variance wrong.
Students subtract in the wrong order or forget that a higher revised cost is bad news.
Fix: For costs, original minus revised. If the revised cost is higher, the result is negative, so Adverse. Check against the logic before writing A or F.
Dropping the original standard from the answer.
Students think the revised standard replaces it completely.
Fix: Keep the original standard for the planning variance and for the reconciliation to the original budget or total variance.
Blaming managers for planning variances.
The numbers look like any other variance, so the interpretation is carried over.
Fix: Say planning variances are generally uncontrollable by operational managers. Note that they may still reflect poor forecasting, so management should review how standards are set.
Revising the standard for reasons that were controllable.
A revision can seem to make the numbers look neat.
Fix: Only revise for external, unforeseen changes. If the question says the manager chose a cheaper supplier, that is an operational matter, not a planning one.

Worked examples

Example 1

A company budgets for 4 kg of material per unit at $5 per kg. Budgeted output is 1,000 units. Actual output is 1,100 units, using 4,500 kg bought at $5.60 per kg. A market price rise means the ex-post standard price is $5.50 per kg. Calculate the planning price variance, the operational price variance, the operational usage variance and the total material variance.

Show the solution

Original standard cost of actual output = 1,100 × 4 kg × $5 = $22,000.
Revised standard cost of actual output = 1,100 × 4 kg × $5.50 = $24,200.
Planning price variance = $22,000 − $24,200 = $2,200 Adverse. (Check: 4,400 kg × $0.50.)
Operational price variance = (5.50 − 5.60) × 4,500 kg = $450 Adverse.
Revised standard usage for 1,100 units = 4,400 kg. Operational usage variance = (4,400 − 4,500) × $5.50 = $550 Adverse.
Actual cost = 4,500 × $5.60 = $25,200. Total variance = 25,200 − 22,000 = $3,200 Adverse.
Check: 2,200 + 450 + 550 = 3,200 Adverse.

Answer: Planning price $2,200 A; operational price $450 A; operational usage $550 A; total material variance $3,200 A.

Example 2

A firm budgeted to sell 10,000 units, being a 10% share of a market of 100,000 units. Standard contribution is $12 per unit. The actual market was 80,000 units and the firm sold 8,600 units. Calculate the ex-post budget volume, the planning sales volume variance, the operational sales volume variance and the total sales volume variance.

Show the solution

Ex-post budget volume = actual market size 80,000 × 10% budgeted share = 8,000 units.
Planning sales volume variance = (10,000 − 8,000) × $12 = $24,000 Adverse, because the market was smaller than forecast.
Operational sales volume variance = (8,600 − 8,000) × $12 = $7,200 Favourable, because the firm sold more than the ex-post budget.
Total sales volume variance = (8,600 − 10,000) × $12 = $16,800 Adverse.
Check: $24,000 A − $7,200 F = $16,800 A.

Answer: Ex-post volume 8,000 units; planning variance $24,000 A; operational variance $7,200 F; total $16,800 A.

Exam tips

Underline the words market, revised, ex-post or uncontrollable in the question. They tell you a planning split is expected.
In Section C, set out the three bases clearly (original, revised, actual) in a small working. Marks go for correct method even if one figure is wrong.
In objective questions, check whether you are asked for the planning or the operational variance, and whether the sign (A or F) matters in the options.
Always add a comment. Say who is responsible for each variance and whether the revision itself is reasonable. Written marks are often missed.
Prove your answer with the total variance check before moving on.

Practice questions from Planning and operational variances

Revising Standards and Ex-Post Budgets: frequently asked questions

What is the difference between a revised standard and an original standard?

The original standard is set before the period using the information available then. The revised standard is what it would have been with hindsight, using actual market conditions. The gap between them is the planning variance.

What is an ex-post budget?

It is a budget flexed to actual output or actual market conditions, using revised standards. It gives a fairer benchmark for judging operational performance than the original budget does.

How do I identify a planning variance in ACCA PM?

Look for an external change that was outside management's control, such as a price rise or a smaller market. The variance caused by that change, original standard against revised standard, is the planning variance.

Do I still use the original standard after revising it?

Yes. You need it to calculate the planning variance and to reconcile to the total variance against the original budget. Only the operational variances move to the revised basis.