Administration cost variance is the difference between the budgeted (standard) administrative cost and the actual administrative cost incurred during a period.

Simple Meaning:

It shows whether the company spent more or less than expected on administrative expenses.

Formula:

Administration Cost Variance = Budgeted Admin Cost – Actual Admin Cost

Interpretation:

Favourable Variance → Actual cost is less than budget

Unfavourable Variance → Actual cost is more than budget

Examples of Administrative Costs:

Office salaries

Office rent

Electricity and utilities

Office supplies

Example:

If budgeted admin cost is ₹2,00,000 and actual cost is ₹2,20,000,
Variance = ₹20,000 (Unfavourable).

In short, administration cost variance measures control over administrative expenses.