Variance 1. Material (i) Material cost variance = Standard Material Cost ~Actual Material Cost (ii) Material price variance = (Standard material price per usage ~ Actual material price per usage) x Actual Material Quantity Purchase (iii) Material usage variance = (Standard usage for actual production ~ Actual usage) x Standard price per usage ***Material Cost per unit = Material price per usage x Material usage per unit (i) Labour cost variance = Standard Labour Cost for actual production ~ Actual Cost Labour (ii) Labour rate variance = (Standard rate per hour ~ Actual rate per hour) x Actual Hour paid 2 Labour (iii) Labour efficiency variance = (iv) Ideal Time Variance (Standard hours for actual production ~ Actual hours) x Standard rate per hour = Ideal Time x Standard labour rate 3.Variance Overhead (i) Variable Overhead cost variance = Standard Variable O/H cost for actual production ~ Actual Variable O/H Cost (ii) Variable overhead expenditure variance =(SVOAR per hour ~ AVOAR per hour) x Actual hours SVOAR = Standard variable overhead absorption rate AVOAR = Actual variable overhead absorption rate (iii) Variable overhead efficiency variance = (Standard hours for actual production ~ Actual hours) x SVOAR per hour 4. Fixed overhead (i) Fixed overhead cost variance =Standard Fixed O/H cost ~ Actual Fixed O/H cost (ii) Fixed overhead expenditure variance =Budgeted Fixed O/H cost for budget production ~ Actual Fixed O/H cost for actual production (iii) Fixed overhead volume variance = (Budgeted Production unit ~ Actual Production unit) x SFOAR per unit (iv) Fixed overhead efficiency variance (v) Fixed overhead capacity variance = (Standard hours for actual production ~Actual hours) x SFOAR per hour = (Budgeted hour for budgeted production ~ Actual hour) x SFOAR per hour 5. Sales (i) Sales price variance = (Standard selling price ~ Actual selling price) x Actual sales Quantity (ii) Sales volume variance = (Budgeted sales quantity ~ Actual sales quantity) x Standard profit per unit **** Standard Profit per unit = Standard selling price per unit - standard total cost per unit Standard Cost per unit = Direct Material cost per unit + Direct Labour cost per unit + Variable O/H Cost per unit + Fixed O/H Cost per unit *** Note Cost - Standard > Actual = Favourable Standard < Actual = Adverse Sales - Standard > Actual = Adverse Standard < Actual = Favourable 17.5/Page New – 485/ Old 466 1. Material usage variance 1 unit = (Standard usage for actual production ~ Actual usage) x Standard price per usage = ( 30 meters x 1040 units) ~ 31200 meters x £ 12 30 meters 1040 unit units x 30 units 1040 = 2. Material price variance Nil = (Standard material price per usage ~ Actual material price per usage) x Actual Material Quantity Purchase 374400/31200 £ 12 ~ £ 12 x 31200 meters = Nil = 3. Labour rate variance 11440 hrs 1hr 136708 £136708 ? 1/11440 x = (Standard rate per hour ~ Actual rate per hour) x Actual Hour paid = (£ 12 ~ £ 11.95) x 11440 hrs = £ 572 (Favourable) 4. Labour efficiency variance = 1 unit 10hrs 1040 units x 10hrs ? 1040units 5. Labour cost variance (Standard hours for actual production ~ Actual hours) x Standard rate per hour = (10 hrs x 1040 units ) ~ 11440 hrs x £ 12 = £ 12480 (Favourable) = Standard Labour Cost for actual production ~ Actual Cost Labour = ( £120 x 1040 units) ~ £136708 = 11980 (Adverse) 6. Fixed O/H Expenditure Variance = Budgeted Fixed O/H cost for budget production ~ Actual Fixed O/H cost for actual production = £ 157.50 x 1200 units ~ £ 207,000 = £ 18000 ( Adverse) 7. Fixed overhead efficiency variance = (Standard hours for actual production ~Actual hours) x SFOAR per hour = 10hrs x 1040 units ~ 11440 units x £ 15.75 = £ 16380 ( Adverse) 8. Fixed overhead volume variance = (Budgeted Production unit ~ Actual Production unit) x SFOAR per unit = ( 1200 units ~ 1040 units ) x £ 157.5 = £ 163800 ( Adverse) = (Budgeted hour for budgeted production ~ Actual hour) x SFOAR per hour 9. Fixed overhead capacity variance = (10hrs x 1200 units) ~ 11440 hrs x £ 15.75 = 12000 hrs ~ 11440 hrs x £ 15.75 = £ 8820 (Adverse) Statement reconciling the standard cost of actual production with the actual cost of actual production Favourable Adverse Standard cost (£ 637.50 x 1040 units) 663000 Direct labour hour variance Direct labour rate variance £ 12480 572 Fixed O/H Expenditure variance 18000 Fixed O/H Efficiency variance 16380 Fixed O/H capacity variance 8820 55108 (A) 55680 718108 Actual Cost 572 *************************************************************** 17.3/Page New – 485/ Old 465 1. Material cost variance = Std .Material Cost per unit Standard Material Cost ~Actual Material Cost = £ 1 x 5400 kg ~ 10600 kg x £0.6 = £960 (Adverse) = Budget material usage x std. Material usage per unit/ Budgeted Production Unit = 10000kgs x 0.50/5000 units = £ 1 2. Material usage variance 5400 unit kgs 1 unit 10600 = 2kgs = (Standard usage for actual production ~ Actual usage) x Standard price per usage = ( 2kgs x 5400 units) ~ 10600 meters x £ 0.50 10600 1/5400 x = 3. Material price variance £ 100 (Favourable) = (Standard material price per usage ~ Actual material price per usage) x Actual Material Quantity Purchase £ 0.50 ~ £ 0.60 x 10600 kgs = £ 1060 (Adverse) = 4. Labour cost variance £ 12 1hr 0.50hr 12 = Standard Labour Cost for actual production ~ Actual Cost Labour = ( £6 x 5400 units) ~ ( £6 .27 x 5400 units) =£ 1458(Adverse) ? 0.50 x 5. Labour efficiency variance = 1unit 0.50 hrs 5400 units x 0.50 ? 5400 6. Labour rate variance (Standard hours for actual production ~ Actual hours) x Standard rate per hour = 2700 hrs ~ 2970 hrs x £ 12 = £ 3240 (Adverse) = (Standard rate per hour ~ Actual rate per hour) x Actual Hour paid = (£ 12 ~ £ 11.40) x 2970 hrs = £ 1782 (Favourable) 7. Fixed O/H Expenditure Variance = Budgeted Fixed O/H cost for budget production ~ Actual Fixed O/H cost for actual production = £ 10000 ~ £ 10300 = £ 300 ( Adverse) 8.Fixed overhead efficiency variance = (Standard hours for actual production ~Actual hours) x SFOAR per hour = 2700 hrs ~ 2970 hrs x £ 4 = £ 3240( Adverse) FOAR per hour = Fixed O/H cost/ Direct labour hour for budget = 10000/2500 = £ 4 9. Fixed overhead volume variance = (Budgeted Production unit ~ Actual Production unit) x SFOAR per unit = ( 5000 units ~ 5400 units ) x £ 2 = £ 800 ( Favourable ) FOAR per hour = Fixed O/H cost/ Budget production unit = 10000/5000 = £ 2 9. Fixed overhead capacity variance 10. Sales price variance = (Budgeted hour for budgeted production ~ Actual hour) x SFOAR per hour = 2500hrs ~ 2970 hrs x £ 2 = £ 940 ( Favourable ) = (Standard selling price ~ Actual selling price) x Actual sales Quantity = (£ 14 ~ £ 15) x 4900 units =£ 4900 (A) 11. Sales volume variance = (Budgeted sales quantity ~ Actual sales quantity) x Standard profit per unit = 5000 units ~ 4900 units x £5 = £500 (Adverse) Standard profit per unit = Std selling price per unit ~ standard total cost per unit = £ 14 -£9 = £5 Standard total cost per unit Direct material cost per unit 1 Direct labour cost per unit 6 Fixed O/H cost per unit 2 9 Statement reconciling the standard cost of actual production with the actual cost of actual production Favourable Adverse Budgeted profit (£25000 -£ 3000) £ 22000 Sale volume profit variance 500 Sales price varince 4900 Direct material usage variance 100 4400 (F) 26400 Direct material price variance 1060 Direct labour hour variance 3240 Direct labour rate variance 1782 Fixed O/H Expenditure variance Fixed O/H Volume variance Admin ( 3100- 3000) Actual Profit 300 800 100 24382 (A) 24382 ***************************************************************************** 17.23 Pg 482(New) Material usage variance 1500 unit kgs 750 1550 units ? (Standard usage for actual production ~ Actual usage) x Standard price per usage = ( 1550units /1500units x 750kgs) ~ Actual usage x £ 4500/750 = 150 (A) = 775 kgs ~ Actual usage x £6 150 A = 4650 kgs ~ £6 x Actual usage Actual usage = 800 kgs Material price variance = (Standard material price per usage ~ Actual material price per usage) x Actual Material Quantity Purchase = £ 6 ~ Actual material price per usage x 1000 kgs = £ 1000(Favourable) £ 6 ~ Actual material price per usage = £ 1 Actual material price per usage = £ 5 Actual Direct Material cost = usage x direct material per usage = £ 1000 x £ 5 = £ 5000 Labour efficiency variance = (Standard hours for actual production ~ Actual hours) x Standard rate per hour 150 A = ( 0.75 x 1550 units ~ Actual hours ) x £ 4 = Labour rate variance = 200A 1200hrs (Standard rate per hour ~ Actual rate per hour) x Actual Hour paid = 200A (£ 4 ~ Actual rate per hour) x 1200 hrs = £ 4800~ 1200 x Actual rate per hour = £4.17 Labour Cost = Actual Hour x rate per hr = 1200 hrs x £4.17 = £5004 = Standard Variable O/H cost for actual production ~ Actual Variable O/H Cost Variable Overhead cost variance = (1.5 x 1550 ) ~ Actual Variable O/H Cost £600 +£ 75 A 2325 ~ Actual Variable O/H Cost =675 A Actual Variable O/H Cost = £3000 = Standard Fixed O/H cost for actual production ~ Actual Fixed O/H Cost Fixed Overhead cost variance 2650 F= (£3x 1550 ) ~ Actual Fixed O/H Cost Actual Fixed O/H Cost = £2000 Actual sale volume = ? Budgeted Profti = 4250 Std. sale volume = 1500units Std profit per unit = 4250/1500 = £2.83 per unit Sale volume variance =850A Std Sale volume ~ Actual Sale volume =850A 1500 unit ~ Actual Sale volume = 300 units (A) = 1200 units £2.83 ---------- 1 unit 850 -----------850/2.83 = 300 units Sales price variance 4000A = (Standard selling price ~ Actual selling price) x Actual sales Quantity = (£ 13.33~ Actual selling price) x 1200 units Actual selling price = *************************************************** Chapter (18) Sales Variance 1. Sales Mix Contribution variance SMCV= (Actual Sales Quantity ~ Actual Sales Quantity in Budgeted portion ) x Std. Contribution per unit 2. Sales Yield Contribution Variance SYCV= (Budgeted Sales Quantity ~ Actual Sales Quantity in Budgeted portion ) x Std. Contribution per unit 3. Material Mix Variance = (Actual Material Quantity ~ Actual Material Quantity in Standard Mix) x Standard material price per usage 4. Material Yield Variance = (Standard Material Quantity for production unit ~ Actual Material Quantity in Standard Mix) x Standard material price per usage 18.13 Pg 506 SMCV= (Actual Sales Quantity ~ Actual Sales Quantity in Budgeted portion ) x Std. Contribution per unit Full Valets = (4000 ~ 7980 (4000 +3980) ) x 3600/ 5600 x (£ 50 x44.6% = £ 22.3) =( 4000~ 5130) x £ 22.3 = £25199 A £25199 A Mini Valets = (3980 ~ 7980 (4000 +3980) ) x 2000/ 5600 x (£ 30 x55% = £ 16.5) =( 3980~ 2850) x £ 16.5 = £18647F £18645 F 86554 (A) 2.Sales Yield Contribution Variance SYCV= (Budgeted Sales Quantity ~ Actual Sales Quantity in Budgeted portion ) x Std. Contribution per unit Full Valets = (3600 ~ 7980 (4000 +3980) ) x 3600/ 5600 x (£ 50 x44.6% = £ 22.3) =( 4000~ 5130) x £ 22.3 = £34119 F £34119 F Mini Valets = (2000 ~ 7980 (4000 +3980) ) x 2000/ 5600 x (£ 30 x55% = £ 16.5) =( 3980~ 2850) x £ 16.5 = £14025F £14025 F 48144 (F) **************************************************** 18.14 Pg 507 1. Material Mix Variance = (Actual Material Quantity ~ Actual Material Quantity in Standard Mix) x Standard material price per usage L = (34080 ~ 181512 x 0.25 /1.35) x 10 £4666.67(A) C = (83232 ~ 181512 x 0.6 /1.35) x 4 £10240 (A) S = (64200 ~ 181512 x 0.5 /1.35) x 3 £9080 (F) £ 582667 (A) 2. Material Yield Variance = (Standard Material Quantity for production unit ~ Actual Material Quantity in Standard Mix) x Standard material price per usage L = (0.25 x 136000 ~ 33613.33) x 10 £3866.67(F) C = (0.6 x 136000 ~ 80672 ) x 4 £3712 S = (0.5 x 136000 ~ 67226.67) x 3 (F) £2319.99 (F) £ 582667 (A) 18.15 Page -507 Material Usage Variance =(Std Material Usage for Actual Production ~ Actual Material Usage ) x Standard material price 1kg = 2200kg per usage 101000 = ? H = (20 x 101000 ~ 2200000) x 0.02 $3600 (A) S = (15 x 101000 ~ 1400000) x 0.03 $3450 (F) $1000 (A) $1150 (A) Syr = (10 x 101000 ~ 1400000) x 0.025 1. Material Mix Variance = (Actual Material Quantity ~ Actual Material Quantity in Standard Mix) x Standard material price per usage H = (2200000 ~ 4650000 x 20 /45) x 0.02 $2666.67 (A) S = (1400000 ~ 4650000 x 15 /45) x 0.03 $4500 (F) Syr = (1050000 ~ 4650000 x 10 /45) x 0.025 $416.67 (A) $1416.66 (F) 1kg = 1000g 2200kg = ? Material Quantity (Yield )Variance = (Standard Material Quantity for production unit ~ Actual Material Quantity in Standard Mix) x Standard material price per usage 45 = 4650000 H = (20kg x 101000 ~ 2066666.67) x 0.02 S = (15kg x 101000 ~1550000) x 0.03 Syr = (10kg x 101000 ~1033333.33) x 0.025 20 = ? $933.33 (A) $ 1050 (A) $583.33 (A) $2566.66 (A) **************************************