ACCOUNTING
L1
STANDARD COSTING
1
RAGHAV WADHWA
❏
MCOM, MBA, B.ED, UGC NET
❏ PRODUCED NUMEROUS AIRs
❏ PLUS VERIFIED EDUCATOR
❏ Awarded a certificate from IIT,
Bombay (under NPTEL)
2
Join
with
us
in
Telegram
For Homework and class
Notes click on:
Telegram Channel
● https://t.me/raghavwadhwa
3
Study Planner
Personal Guidance
Customized study plan
with bi-weekly reviews
Get one on one guidance
from top exam experts
Live Classes
ICONIC
Weekly Tests
PLUS
Structured
Courses
Unlimited
Access
Test Analysis
Study Material
Get one on one guidance
from top exam experts
Specialised Notes & Practice
Sets
Experts' Guidelines
Study booster workshops by
exam experts
4
RAGHAVJRF
RAGHAVJRF
5
6
ACCOUNTING
STANDARD COSTING
7
MATERIAL VARIANCES
SR × SQ
SR × SM
MYV
SR × AQ
MMV
AR × AQ
MPV
MUV
MCV
SR = Standard Rate
SQ = Standard Quantity (for Actual Production)
SM = Standard Mix (Total of AQ but in the ratio of SQ)
AQ = Actual Quantity Consumed (for Actual Production)
AR = Actual Rate
NOTE: SR, AQ, and AR are always given. These can be need to compute SQ and SM.
SQ is computed only when actual output is given.
8
MATERIAL VARIANCES
The standard material required for production is 5,200 kg. A price of ₹ 2 per kg has been xed for the
materials. The actual quantity of materials used for the product is 5,600 kg. A sum of ₹ 14,000 has been paid
for the materials.
Calculate: (a) MCV; (b) MPV; (c) MUV.
9
fi
Q1
MATERIAL VARIANCES
Sol
The standard material required for production is 5,200 kg. A price of ₹ 2 per kg has been xed for the
materials. The actual quantity of materials used for the product is 5,600 kg. A sum of ₹ 14,000 has been paid
for the materials.
Calculate: (a) MCV; (b) MPV; (c) MUV.
AR = 14,000/5000 = ₹ 2.50 per kg.
SR × SQ
2 × 5,200
10,400
SR × SM
INACTIVE FIELD
SR × AQ
2 × 5,600
11,200
AR × AQ
2.5 × 5,600
14,000
MUV = (SR × SQ) - (SR × AQ)
= 10,400 - 11,200
= 800 (A)
MPV = (SR × AQ) - (AR × AQ)
= 11,200 - 14,000
= 2,800 (A)
MCV = (SR × SQ) - (AR × AQ)
= 10,400 - 14,000
= 3,600 (A)
10
fi
Q1
MATERIAL VARIANCES
Q2
A manufacturer requires 10 kg standard material to manufacture one unit of product ‘X’. The standard price per
kg of material is ₹ 5. The accounting records, however, reveal that 25,000 kg of material costing ₹ 1,50,000 were
used for manufacturing 2,000 units. Calculate the material variances.
11
MATERIAL VARIANCES
Q2
Sol
A manufacturer requires 10 kg standard material to manufacture one unit of product ‘X’. The standard price per
kg of material is ₹ 5. The accounting records, however, reveal that 25,000 kg of material costing ₹ 1,50,000 were
used for manufacturing 2,000 units. Calculate the material variances.
Standard Quantity (SQ) for 2,000 units
= 2,000 units × 10 kg = 20,000 kg
AR = 1,50,000/25,000 = ₹ 6 per kg
SR × SQ
5 × 20,000
1,00,000
MUV = (SR × SQ) - (SR × AQ)
= 1,00,000 - 1,50,000
= 50,000 (A)
MPV = (SR × AQ) - (AR × AQ)
= 1,25,000 - 1,50,000
= 25,000 (A)
MCV = (SR × SQ) - (AR × AQ)
= 1,00,000 - 1,50,000
= 25,000 (A)
SR × SM
INACTIVE FIELD
SR × AQ
5 × 25,000
1,25,000
AR × AQ
6 × 25,000
1,50,000
12
MATERIAL VARIANCES
Q3
Material
A
B
C
Standard Quantity (kg)
10
15
25
50
Standard Price (₹)
5
2
3
Actual Quantity (kg)
10
10
30
50
Actual Price (₹)
6
2
5
Find out Material Mix Variances.
Sol
Materials
A
B
C
SR × SQ
5 × 10 = 50
2 × 15 = 30
3 × 25 = 75
SR × SM
5 × 10 = 50
2 × 15 = 30
3 × 25 = 75
SR × AQ
5 × 10 = 50
2 × 10 = 20
3 × 30 = 90
AR × AQ
6 × 10 = 60
2 × 10 = 20
5 × 30 = 150
Total
155
155
160
230
MYV = (SR × SQ) - (SR × SM) =
MMV = (SR × SM) - (SR × AQ) = 155 - 160 = 5(A)
MUV = (SR × SQ) - (SR × AQ) =
MPV = (SR × AQ) - (AR × AQ) =
MCV = (SR × SQ) - (AR × AQ) =
13
MATERIAL VARIANCES
Q4
Standard
Material
X
Y
Quantity
200
100
300
Actual
Price (₹)
2
5
Amount (₹)
400
500
900
Quantity
240
120
360
Price (₹)
2.20
4.50
Amount (₹)
528
540
1,068
Find out Material Variances.
Sol
Materials
Y
SR × SQ
2 × 200 = 400
5 × 100 = 500
SR × SM
2 × 240 = 480
5 × 120 = 600
SR × AQ
2 × 240 = 480
5 × 120 = 600
AR × AQ
2.20 × 240 = 528
4.50 × 120 = 540
Total
900
1,080
1,080
1,068
X
MYV = (SR × SQ) - (SR × SM) = 900 - 1,080 = 180(A)
MMV = (SR × SM) - (SR × AQ) = 1,080 - 1,080 = NIL
MUV = (SR × SQ) - (SR × AQ) = 900 - 1,080 = 180(A)
MPV = (SR × AQ) - (AR × AQ) = 1,080 - 1,068 = 12(F)
MCV = (SR × SQ) - (AR × AQ) = 900 - 1,068 = 168(A)
14
MATERIAL VARIANCES
Q5
Sol
Material
A
B
C
Standard Quantity (kg)
Standard Price (₹)
Total Amount (₹)
60
6
360
40
5
200
20
7
140
120
700
Due to shortage of material A it was decided to reduced consumption of A by 10% and to increase that of B by
10%. The actual quantities used were - A = 40 kg; B = 50 kg and C = 24 kg.
Materials
A
B
C
SR × SQ
6 × 54 = 324
5 × 44 = 220
7 × 20 = 140
SR × SM
6 × 52.2 = 313.20
5 × 42.5 = 212.50
7 × 19.3 = 135.10
SR × AQ
6 × 40 = 240
5 × 50 = 250
7 × 24 = 168
AR × AQ
6 × 40 = 240
5 × 50 = 250
7 × 24 = 168
Total
684
660.80
658
658
MYV = (SR × SQ) - (SR × SM) = 684 - 660.80 = 23.20(F)
MMV = (SR × SM) - (SR × AQ) = 660.80 - 658 = 2.80(A)
MUV = (SR × SQ) - (SR × AQ) = 684 - 658 = 26(F)
MPV = (SR × AQ) - (AR × AQ) = 658 - 658 = NIL
MCV = (SR × SQ) - (AR × AQ) = 684 - 658 = 26(F)
15
MATERIAL VARIANCES
Q6
The standard cost of a company shows:
Standard Mix:
40% of Material A at ₹ 10 per ton.
60% of Material B at ₹ 20 per ton.
The normal loss in production is 10% of input. During the month of February 2022, the cost and production records reveal
the following:
90 tons Material A at the cost of ₹ 9 per ton.
110 tons of Material B at the cost of ₹ 24 per ton.
The yield produced 190 tons of good production.
Calculate Material Variances.
Sol
Materials
SR × SQ
SR × SM
SR × AQ
AR × AQ
A
10 × 84.4 = 844.44
10 × 80 = 800
10 × 90 = 900
9 × 90 = 810
B
20 × 126.6 = 2,533.33
20 × 120 = 2,400
20 × 110 = 2,200
24 × 110 = 2,640
Total
3,377.77
3,200
3,100
3,450
16
MATERIAL VARIANCES
Sol
Materials
SR × SQ
SR × SM
SR × AQ
AR × AQ
A
10 × 84.4 = 844.44
10 × 80 = 800
10 × 90 = 900
9 × 90 = 810
B
20 × 126.6 = 2,533.33
20 × 120 = 2,400
20 × 110 = 2,200
24 × 110 = 2,640
Total
3,377.77
3,200
3,100
3,450
MYV = (SR × SQ) - (SR × SM) = 3,377.77 - 3,200 = 177.77(F)
MMV = (SR × SM) - (SR × AQ) = 3,200- 3,100 = 100(F)
MUV = (SR × SQ) - (SR × AQ) = 3,377.77 - 3,100 = 277.77(F)
MPV = (SR × AQ) - (AR × AQ) = 3,100 - 3,450 = 350(A)
MCV = (SR × SQ) - (AR × AQ) = 3,377.77 - 3,450 = 72.27(A)
17
LABOUR VARIANCES
SR × ST
SR × SM
LYV
SR × AT(W)
LMV
SR × AT(P)
LITV
AR × AT(P)
LPV
LEV
TLEV
LCV
SR = Standard Rate (Always given)
ST = Standard Time (for Actual Production)
SM = Standard Mix [Total of AT(P) but in the ratio of ST]
AT(W) = Actual Time Worked
AT(P) = Actual Time Paid (Always given)
AR = Actual Rate
Note:
1. AT(W) = AT(P) - Idle Time
2. Calculation of Standard Time:
A worker can produce 200 units in a day of 8 hours (standard)
Actual output during the period is 50,000 units
Therefore, Standard Time = 8 hours/200 units × 50,000 units = 2,000 hours
18
LABOUR VARIANCES
Q7
From the following information, compute Labour Variances.
Standard
Workers
A
B
Hours
10
15
Rate per hour (₹)
3.00
4.00
Total Amount (₹)
30.00
60.00
Rate per hour (₹)
3.00
4.50
Total Amount (₹)
60.00
22.50
Actual
Workers
A
B
Sol
Hours
20
5
Workers
SR × ST
A
B
Total
SR × SM
SR × AT(W)
SR × AT(P)
AR × AT(P)
3 × 10 = 30
3 × 20 = 60
3 × 20 = 60
3 × 20 = 60
4 × 15 = 60
90
4 × 5 = 20
80
4 × 5 = 20
80
4.5 × 5 = 22.50
82.50
LEV = (SR × ST) - (SR × ATW) = 90 - 80 = 10(F)
LPV = (SR × ATP) - (AR × ATP) = 80 - 82.50 = 2.50(A)
LCV = (SR × ST) - (AR × ATP) = 90 - 82.50 = 7.50(F)
19
LABOUR VARIANCES
Q8
Calculate Labour Variances from the following information:
Labour Rate = Re 1 per hour
Hours as Standard per unit = 12 Hours
Actual Data:
Units produced = 1,000
Actual Labour Cost = ₹ 10,000
Hours worked actually = 12,500 Hours
Sol.
ST = 12 Hours × 1,000 units = 12,000 Hours
AR = ₹ 10,000/ 12,500 Hours = ₹ 0.80 per Hour
SR × ST
SR × SM
SR × AT(W)
SR × AT(P)
AR × AT(P)
1 × 12,000
——
1 × 12,500
1 × 12,500
0.8 × 12,500
12,500
12,500
10,000
12,000
LEV = (SR × ST) - (SR × ATW) = 12,000 - 12,500 = 500(A)
LPV = (SR × ATP) - (AR × ATP) = 12,500 - 10,000 = 2,500(F)
LCV = (SR × ST) - (AR × ATP) = 12,000 - 10,000 = 2,000(F)
20
LABOUR VARIANCES
Q9
The following information relates to a manufacturing company:
Number of employees
150
Weekly hours worked
30 Hours
Standard Wage rate
₹ 0.50 per hour
Standard Output
200 units per hour
During the rst week of February 2022, 8 employees were paid at ₹ 0.45 per hour and 2 employees ar ₹ 0.55 per hour, the
rest employees were paid at standard rates. Idle time is one hour per employee. Actual output was 6,250 units. Calculate
Labour Variances.
Sol.
Standard Time = 150 employees × 30 Hours = 4,500 Hours
Standard Production = 200 units per hour × 30 hours = 6,000 units
Standard Time for Actual Production = 4,500 Hours/ 6,000 units × 6,250 units = 4,688 Hours
SR × ST
SR × SM
SR × AT(W)
SR × AT(P)
AR × AT(P)
0.5 × 4,688 = 2,344
——
0.5 × 4,350 = 2,175
0.5 × 4,500 = 2,250
0.45 × (8 × 30) = 108
0.55 × (2 × 30) = 33
0.50 × (140 × 30) = 2,100
2,344
2,175
2,250
2,241
fi
21
LABOUR VARIANCES
Sol.
Standard Time = 150 employees × 30 Hours = 4,500 Hours
Standard Production = 200 units per hour × 30 hours = 6,000 units
Standard Time for Actual Production = 4,500 Hours/ 6,000 units × 6,260 units = 4,688 Hours
SR × ST
SR × SM
SR × AT(W)
SR × AT(P)
AR × AT(P)
0.5 × 4,688 = 2,344
——
0.5 × 4,350 = 2,175
0.5 × 4,500 = 2,250
0.45 × (8 × 30) = 108
0.55 × (2 × 30) = 33
0.50 × (140 × 30) = 2,100
2,344
2,175
Idle Time:
For 8 Employees = 1 Hour × 8 Employees =
8 Hours
For 2 Employees = 1 Hour × 2 Employees =
2 Hours
For 140 Employees = 1 Hour × 140 Employees = 140 Hours
2,241
LEV = (SR × ST) - (SR × ATW) = 2,344 - 2,175 = 169(F)
LITV = (SR × ATW) - (SR × ATP) = 2,175 - 2,250 =75(A)
TLEV = (SR × ST) - (SR × ATP) = 2,344 - 2,250 = 94(F)
LPV = (SR × ATP) - (AR × ATP) = 2,250 - 2,241 = 9(F)
LCV = (SR × ST) - (AR × ATP) = 2,344 - 2,241 = 103(F)
AT(W)
For 8 Employees = (8 × 30) - 8 Hours =
232 Hours
For 2 Employees = (2 × 30) - 2 Hours =
58 Hours
For 140 Employees = (140 × 30) - 140 Hours = 4,060 Hours
Total of AT(W)
2,250
4,350 Hours
22
VARIABLE OVERHEAD VARIANCES
SR × ST
SR × AT
AR × AT
VO Expenditure Var
VO E ciency Var
VO Cost Var
SR = Standard Rate (Always given)
ST = Standard Time (for Actual Production)
AT = Actual Time Paid (Always given)
AR = Actual Rate
ffi
23
VARIABLE OVERHEAD VARIANCES
Q9
From the following information of G Ltd., Calculate Variable Overhead Variances.
Budgeted Production
= 6,000 units
Budgeted Variable Overhead
= ₹ 1,20,000
Standard time for one unit of output = 2 hours
Actual Production
= 5,900 units
Variable Overhead Incurred
= ₹ 1,22,000
Actual hours worked
= 11,600 hours
Sol.
SR = ₹ 1,20,000/12,000 Hours = ₹ 10 per hour
ST = 5,900 units × 2 Hours = 11,800 hours
AR = ₹ 1,22,000/11,600 Hours = ₹ 10.517 per hour
SR × ST
SR × AT
AR × AT
10 × 11,800
10 × 11600
10.517 × 11,600
1,18,000
1,16,000
1,22,000
VO Ef ciency Var = (SR × ST) - (SR × AT) = 1,18,000 - 1,16,000 = 2,000(F)
VO Expenditure Var = (SR × AT) - (AR × AT) = 1,16,000 - 1,22,000 = 6,000(A)
VO Cost Var = (SR × ST) - (AR × AT) = 1,18,000 - 1,22,000 = 4,000(A)
fi
24
VARIABLE OVERHEAD VARIANCES
Q 10
From the following information, Calculate Variable Overhead Variances.
Standard hours per unit : 3
Variable overhead per hour : ₹ 5
Actual variable overhead incurred : ₹ 4,20,000
Actual output : 30,000 units
Actual hours worked : 1,00,000 hours
Sol.
ST = 30,000 units × 3 Hours = 90,000 hours
AR = ₹ 4,20,000/1,00,000 Hours = ₹ 4,20 per hour
SR × ST
SR × AT
AR × AT
5 × 90,000
5 × 1,00,000
4.20 × 1,00,000
4,50,000
5,00,000
4,20,000
VO Ef ciency Var = (SR × ST) - (SR × AT) = 4,50,000 - 5,00,000 = 50,000(A)
VO Expenditure Var = (SR × AT) - (AR × AT) = 5,00,000 - 4,20,000 = 80,000(F)
VO Cost Var = (SR × ST) - (AR × AT) = 4,50,000 - 4,20,000 = 30,000(F)
fi
25
FIXED OVERHEAD VARIANCES
SR × SH
SR × AH
FO EFFICIENCY VAR
SR × RBH
FO CAPACITY VAR
SR × BH
FO CALENDER VAR
AR × AH
FO EXPENDITURE VAR
FO VOLUME VAR
FO COST VAR
SR = Standard Rate of FO per hour
[Budgeted FO/ Budgeted Hours]
AR = Actual Rate
SH = Standard Hours for Actual Production
[Budgeted Hours/Budgeted Production × Actual Production]
AH = Actual Hours (Always Given)
BH = Budgeted Hours (Normally Given; If not then BH = BFO/BFO Rate Per hour)
RBH = Revised Budgeted Hours
26
FIXED OVERHEAD VARIANCES
Q 10
In Department ‘P’ of a plant, the following
Standard Output for 40 hours per week
Budgeted Fixed Overheads
Actual Output
Actual Hours Worked
Actual Fixed Overheads
Calculate Fixed Overhead Variances.
Sol.
SR = ₹ 2,800/40 Hours = ₹ 70 per hour
SH = 40 Hours/2,800 Units × 2,400 Units = 34.28 hours
SR × SH
70 × 34.28 Hrs = 2,400
2,400
data are submitted for the week ended 31st March, 2022:
2,800 units
₹ 2,800
2,400 units
35 Hours
₹ 3,000
SR × AH
SR × RBH
SR × BH
AR × AH
70 × 35 Hrs = 2,450 70 × 40 Hrs = 2,800 70 × 40 Hrs = 2,800 85.71 × 35 Hrs = 3,000
2,450
2,800
2,800
3,000
FO Ef ciency Var = (SR × SH) - (SR × AH) = 2,400 - 2,450 = 50(A)
FO Capacity Var = (SR × AH) - (SR × RBH) = 2,450 - 2,800 = 350(A)
FO Calendar Var = (SR × RBH) - (SR × BH) = 2,800 - 2,800 = NIL
FO Volume Var = (SR × SH) - (SR × BH) = 2,400 - 2,800 = 400(A)
FO Expenditure Var = (SR × BH) - (AR × AH) = 2,800 - 3,000 = 200(A)
fi
FO Cost Var = (SR × SH) - (AR × AH) = 2,400 - 3,000 = 600(A)
27
FIXED OVERHEAD VARIANCES
Q 10
Raghav Company Ltd. is having standard costing system in operation for quite some time. The following relating to the month
of June, 2022 is available from the cost records:
Output
Operating Hours
Fixed Overheads
Working Days
Sol.
Budgeted
30,000 Units
25,000 Hours
₹ 50,000
25
Actual
32,500 Units
28,000 Hours
₹ 55,000
26
SR = ₹50,000/25,000 Hours = ₹2 per hour
SH = 25,000 Hours/30,000 Units × 32,500 Units = 27,083 hours
RBH = 25,000 Hours/25 Days × 26 Days = 26,000 Hours
SR × SH
SR × AH
SR × RBH
2 × 27,083 Hrs = 54,167
54,167
2 × 28,000 Hrs 2 × 26,000 Hrs = 52,000
= 56,000
56,000
SR × BH
AR × AH
2 × 25,000 Hrs =
50,000
1.96 × 28,000 Hrs =
55,000
50,000
55,000
52,000
FO Ef ciency Var = (SR × SH) - (SR × AH) = 54,167 - 56,000 = 1,833(A)
FO Capacity Var = (SR × AH) - (SR × RBH) = 56,000 - 52,000 = 4,000(F)
FO Calendar Var = (SR × RBH) - (SR × BH) = 52,000 - 50,000 = 2,000 (F)
FO Volume Var = (SR × SH) - (SR × BH) = 54,167 - 50,000 = 4,167(F)
FO Expenditure Var = (SR × BH) - (AR × AH) = 50,000 - 55,000 = 5,000(A)
fi
FO Cost Var = (SR × SH) - (AR × AH) = 54,167 - 56,000 = 833(A)
28
FIXED OVERHEAD VARIANCES
Q 11
Mehak Ltd. has furnished you the following data:
Budgeted
Actual
Number of Working Days 25
27
Production (in units)
20,000
22,000
Fixed Overheads
₹ 30,000
₹ 31,000
Budgeted Fixed Overhead Rate is ₹ 1.00 per hour. In July, 2022, the actual hours worked were 31,500.
Calculate Fixed Overhead Variances
Sol.
SH = 30,000 Hours/20,000 Units × 22,000 Units = 33,000 hours
RBH = 30,000 Hours/25 Days × 27 Days = 32,400 Hours
SR × SH
SR × AH
SR × RBH
1 × 33,000 Hrs = 33,000 1 × 31,500 Hrs = 1 × 32,400 Hrs = 32,400
31,500
33,000
31,500
32,400
SR × BH
AR × AH
1 × 30,000 Hrs =
30,000
0.98 × 31,500 Hrs =
31,000
30,000
31,000
FO Ef ciency Var = (SR × SH) - (SR × AH) = 33,000 - 31,500 = 1,500(F)
FO Capacity Var = (SR × AH) - (SR × RBH) = 31,500 - 32,400 = 900(A)
FO Calendar Var = (SR × RBH) - (SR × BH) = 32,400 - 30,000 = 2,400 (F)
FO Volume Var = (SR × SH) - (SR × BH) = 33,000 - 30,000 = 3,000(F)
FO Expenditure Var = (SR × BH) - (AR × AH) = 30,000 - 31,000 = 1,000(A)
fi
FO Cost Var = (SR × SH) - (AR × AH) = 33,000 - 31,000 = 2,000(F)
29
SALES VARIANCES
SR × SQ
SR × SM
Sales Quantity
Variance (SQV)
SR × AQ
Sales Mix
Variance (SMV)
AR × AQ
Sales Price
Variance (SPV)
Sales Volume
Variance (SVV)
Sales Value Variance
SR = Standard Selling Price
SQ = Standard Quantity of Sales
SM = Standard Mix (Total of AQ but in the ratio of SQ)
AQ = Actual Quantity Sold
AR = Actual Selling Price
NOTE: Arrows are in OPPOSITE direction.
30
SALES VARIANCES
Q 12
The budgeted sales for one month and the actual results achieved are as under:
Budget
Material
Quantity (Units)
M
N
O
P
Total
2,500
Actual
Amount (₹)
10,000
Quantity (Units)
1,000
Price (₹)
10.00
700
20.00
500
300
1,200
Price (₹)
12.50
Amount (₹)
15,000
14,000
800
15.00
12,000
30.00
15,000
600
30.00
18,000
50.00
15,000
400
60.00
24,000
54,000
3,000
69,000
You are required to calculate in respect of each product the Sales Variance.
Sol
Materials
SR × SQ
SR × SM
SR × AQ
AR × AQ
M
10 × 1000 = 10,000
10 × 1200 = 12,000
10 × 1200 = 12,000
12.50 × 1200 = 15,000
N
20 × 700 = 14,000
20 × 840 = 16,800
20 × 800 = 16,000
15 × 800 = 12,000
O
30 × 500 = 15,000
30 × 600 = 18,000
30 × 600 = 18,000
30 × 600 = 18,000
P
50 × 300 = 15,000
50 × 360 = 18,000
50 × 400 = 20,000
60 × 400 = 24,000
Total
54,000
64,800
66,000
69,000
31
SALES VARIANCES
Sol
Materials
SR × SQ
SR × SM
SR × AQ
AR × AQ
M
10 × 1000 = 10,000
10 × 1200 = 12,000
10 × 1200 = 12,000
12.50 × 1200 = 15,000
N
20 × 700 = 14,000
20 × 840 = 16,800
20 × 800 = 16,000
15 × 800 = 12,000
O
30 × 500 = 15,000
30 × 600 = 18,000
30 × 600 = 18,000
30 × 600 = 18,000
P
50 × 300 = 15,000
50 × 360 = 18,000
50 × 400 = 20,000
60 × 400 = 24,000
Total
54,000
64,800
66,000
69,000
Sales Quantity Var (SQV) = (SR × SM) - (SR × SQ) = 64,800 - 54,000 = 10,800(F)
Sales Mix Variance (SMV) = (SR × AQ) - (SR × SM) = 66,000 - 64,800 = 1,200(F)
Sales Volume Variance (SVV) = (SR × AQ) - (SR × SQ) = 66,000 - 54,000 = 12,000(F)
Sales Price Variance (SPV) = (AR × AQ) - (SR × AQ) = 69,000 - 66,000 = 3,000(F)
Sales Value Variance = (AR × AQ) - (SR × SQ) = 69,000 - 54,000 = 15,000(F)
32
UGC NET COMMERCE
The devia ons between actual and standard cost is known as:
(a) Mul ple analysis
(b) Variable cost analysis
(c) Variance analysis
(d) Linear trend analysis
ti
ti
33
UGC NET COMMERCE
The devia ons between actual and standard cost is known as:
(a) Mul ple analysis
(b) Variable cost analysis
(c) Variance analysis
(d) Linear trend analysis
ti
ti
34
UGC NET COMMERCE
Overhead cost variances is:
(a) The di erence between overheads recovered on actual output - actual overhead
incurred.
(b) The di erence between budgeted overhead cost and actual overhead cost.
(c) Obtained by mul plying standard overhead absorp on rate with the di erence
between standard hours for actual output and actual hours worked.
(d) None of the above
ff
ti
ti
ff
ff
35
UGC NET COMMERCE
Overhead cost variances is:
(a) The di erence between overheads recovered on actual output - actual overhead
incurred.
(b) The di erence between budgeted overhead cost and actual overhead cost.
(c) Obtained by mul plying standard overhead absorp on rate with the di erence
between standard hours for actual output and actual hours worked.
(d) None of the above
ff
ti
ti
ff
ff
36
FIXED OVERHEAD VARIANCES
SR × SH
SR × AH
FO EFFICIENCY VAR
SR × RBH
FO CAPACITY VAR
SR × BH
FO CALENDER VAR
AR × AH
FO EXPENDITURE VAR
FO VOLUME VAR
FO COST VAR
SR = Standard Rate of FO per hour
[Budgeted FO/ Budgeted Hours]
AR = Actual Rate
SH = Standard Hours for Actual Production
[Budgeted Hours/Budgeted Production × Actual Production]
AH = Actual Hours (Always Given)
BH = Budgeted Hours (Normally Given; If not then BH = BFO/BFO Rate Per hour)
RBH = Revised Budgeted Hours
37
UGC NET COMMERCE
Which of the following variance arises when more than one material is used in the
manufacture of a product:
(a) Material price variance
(b) Material usage variance
(c) Material cost variance
(d) Material mix variance
38
UGC NET COMMERCE
Which of the following variance arises when more than one material is used in the
manufacture of a product:
(a) Material price variance
(b) Material usage variance
(c) Material cost variance
(d) Material mix variance
39
MATERIAL VARIANCES
SR × SQ
SR × SM
MYV
SR × AQ
MMV
AR × AQ
MPV
MUV
MCV
SR = Standard Rate
SQ = Standard Quantity (for Actual Production)
SM = Standard Mix (Total of AQ but in the ratio of SQ)
AQ = Actual Quantity Consumed (for Actual Production)
AR = Actual Rate
NOTE: SR, AQ, and AR are always given. These can be need to compute SQ and SM.
SQ is computed only when actual output is given.
40
UGC NET COMMERCE
If standard hours for 100 units of output are 400 @ ₹ 2 per hour and actual hours taken
are 380 @ ₹ 2.25 per hour, then the labour rate/pay variance is:
(a) ₹ 95 (adverse)
(b) ₹ 100 (adverse)
(c) ₹ 25 (favourable)
(d) ₹ 55 (adverse)
41
UGC NET COMMERCE
If standard hours for 100 units of output are 400 @ ₹ 2 per hour and actual hours taken
are 380 @ ₹ 2.25 per hour, then the labour rate/pay variance is:
(a) ₹ 95 (adverse)
(b) ₹ 100 (adverse)
(c) ₹ 25 (favourable)
(d) ₹ 55 (adverse)
42
LABOUR VARIANCES
SR × ST
SR × SM
LYV
SR × AT(W)
LMV
SR × AT(P)
LITV
AR × AT(P)
LPV
LEV
TLEV
LCV
SR = Standard Rate (Always given)
ST = Standard Time (for Actual Production)
SM = Standard Mix [Total of AT(P) but in the ratio of ST]
AT(W) = Actual Time Worked
AT(P) = Actual Time Paid (Always given)
AR = Actual Rate
Note:
1. AT(W) = AT(P) - Idle Time
2. Calculation of Standard Time:
A worker can produce 200 units in a day of 8 hours (standard)
Actual output during the period is 50,000 units
Therefore, Standard Time = 8 hours/200 units × 50,000 units = 2,000 hours
43
UGC NET COMMERCE
Idle me variance is obtained by mul plying:
(a) The di erence between standard and actual hours by the actual rate of labour per
hour
(b) The di erence between actual labour hours paid and actual labour hours worked by
the standard rate
(c) The di erence between standard and actual hours by the standard rate of labour per
hour
(d) None of the above.
ti
ff
ff
ff
ti
44
UGC NET COMMERCE
Idle me variance is obtained by mul plying:
(a) The di erence between standard and actual hours by the actual rate of labour per
hour
(b) The di erence between actual labour hours paid and actual labour hours worked by
the standard rate
(c) The di erence between standard and actual hours by the standard rate of labour per
hour
(d) None of the above.
ti
ff
ff
ff
ti
45
LABOUR VARIANCES
SR × ST
SR × SM
LYV
SR × AT(W)
LMV
SR × AT(P)
LITV
AR × AT(P)
LPV
LEV
TLEV
LCV
SR = Standard Rate (Always given)
ST = Standard Time (for Actual Production)
SM = Standard Mix [Total of AT(P) but in the ratio of ST]
AT(W) = Actual Time Worked
AT(P) = Actual Time Paid (Always given)
AR = Actual Rate
Note:
1. AT(W) = AT(P) - Idle Time
2. Calculation of Standard Time:
A worker can produce 200 units in a day of 8 hours (standard)
Actual output during the period is 50,000 units
Therefore, Standard Time = 8 hours/200 units × 50,000 units = 2,000 hours
46