EngineerBenchComparing estimated and actual job costs
For each line, cost is quantity multiplied by rate. The variance is actual cost minus estimated cost, so a positive cost variance means the line cost more than planned. Comparing both quantities and rates helps distinguish extra work or material from a change in price.
Compare like with like
Use the same units and scope on both sides of a line. Hours cannot be compared with minutes without conversion, and a material estimate excluding freight is not directly comparable with an actual total that includes it. Split mixed charges when they obscure the reason for a difference.
Use the result to improve the next estimate
Review large changes against job records before deciding whether to revise a standard time, price, or waste allowance. The worksheet summarizes the numbers entered; it does not infer the cause of an overrun or replace an accounting record. Unrecorded costs remain absent from the comparison.
Finding whether quantity or rate changed
Suppose a material line was estimated at 10 units for $5 each, but actual use was 12 units at $6 each. Estimated cost is $50 and actual cost is $72, giving a $22 unfavorable cost variance. Both quantity and price changed, so describing the whole difference as extra consumption would be misleading.
Compare consistent scope and units before drawing a conclusion. An actual charge that includes freight, tax, or subcontract work should be separated or matched with the corresponding estimate. A negative cost variance means spending was below the entered estimate, but it does not by itself show that productivity improved; work may have been omitted, deferred, or changed. Keep supporting job records for those explanations. Review large recurring differences when updating future estimating assumptions, and distinguish one-off events from systematic underestimation. The worksheet calculates arithmetic variance only. It does not allocate overhead automatically, infer causes, reconcile invoices, or replace the financial records used to establish the actual job cost.
Formula
Variance = actual quantity × actual rate − estimated quantity × estimated rate.