Problem- 4
(Material & Labour)
The following details relating to the product ‘X’ during the
month March, 2011 are available. You are required to
compute:
i. Material Price Variance.
ii. Material Usage Variance.
iii.Material Cost Variance
iv.Labour Rate Variance.
v. Labour Efficiency Variance.
vi.Labour Cost Variance.
Contd…
You are also required to reconcile the standard and actual cost with
help of such variances.
Standard Cost per unit:
Material 50 Kg. @ ` 40 per kg.
Labour 400 hrs. @ ` 1.00 per kg.
Actual Cost for the month:
Material 4,900 Kg. @ ` 42 per kg.
Labour 39,600 hrs. @ ` 1.10 per kg.
Actual production – 100 units
Problem -5
(Labour & Variable Overhead)
The following information has been extracted from the books of Goru Enterprises
which is using standard costing system:
Actual output
Direct wages paid
Standard hours
Labour efficiency variance
Standard variable overhead
Actual variable overhead
9,000 units
1,10,000 hours at ` 22 per hour, of which 5,000
hours, being idle time, were not recorded in
production
10 hours per unit
` 3,75,000 (A)
` 150 per unit
` 16,00,000
You are required to calculate: (i) Idle time variance; (ii) Variable overhead
expenditure variance; (iii) Total variable overhead variance and (iv) Variable
overhead efficiency variance.
Problem -6
(Fixed Overheads)
AKASH LTD. operates a system of Standard Costing. The
company has normal monthly machine hour capacity of
100 machines working 8 hours per day for 25 working days
in the month of April 2014.
i. The Standard time required to manufacture one unit of
products is 4 hours. The Budgeted fixed overhead was
1,50,000.
ii. In the month of April 2014, the company actually worked
for 24 days for average 750 machine – hours per day.
Contd…
(iii)The Actual production was, 4,500 units, and the actual fixed
overhead was 1,60,000.
You are required to compute:
A. Fixed overhead efficiency variance
B. Fixed overhead capacity variance
C. Fixed overhead calendar variance
D. Fixed overhead expenditure variance
E. Fixed overhead volume variance
F. Fixed overhead cost variance.
Problem – 7
(Overheads)
The following budget was prepared for the overhead of Department
X:
Fixed overhead
Variable overhead
Machine hours
Standard hours of production
Budget for period
` 5,600
` 10,400
1,600
1,600
After the period the actual results were:
Total overhead
Machine hours
Standard hours produced
` 17,400
1,630
1,590
You are required to calculate the overhead variances for the period.
Contd…
At the end of the period, a price of ` 3.00 was agreed to have been
an efficient buying price in the period. The standard costing system
shows a direct material total variance of ` 8,800 made up of:Material usage variance
` 2,000 (A)
Material Price Variance
` 16,800 (A)
Management wishes to distinguish between controllable and
uncontrollable effects on performance.