ICWA INTER DEC 1994

From Following Data compute the material cost variances

Name of the material

Standard
Qty (Units)
Price (Rs.)
3,500.00
10.00
1,500.00
21.00
1,000.00
33.00

ZEE
WEE
TEE

Actual
Qty (Units)
Price (Rs.)
3,700.00
12.00
1,650.00
20.00
1,250.00
36.00

SOLUTIONS
BASIC DATA
ACTUAL COST OF MATERIAL
USED
MATERIAL
ZEE
WEE
TEE

MATERIAL
USED (UNITS)
3,700.00
1,650.00
1,250.00
6,600.00

Price
12.00
20.00
36.00

Amount
44,400.00
33,000.00
45,000.00
122,400.00

STD COST OF STANDARD

MATERIAL
MATERIAL
ZEE

STD QTY
(UNITS)
3,500.00

Price
10.00

Amount
35,000.00

STD COST OF MATERIAL USED

Price
10.00
21.00
33.00

Amount
37,000.00
34,650.00
41,250.00
112,900.00

WEE
TEE

1,500.00
1,000.00
6,000.00

21.00
33.00

31,500.00
33,000.00
99,500.00

STANDARD COST OF MATERIAL USED IN STANDARD MIX

MATERIAL
ZEE
TEE
WEE

STD MIX UNITS

3,850.00
1,650.00
1,100.00
6,600.00

STD RATE
10.00
21.00
33.00

AMT
38,500.00
34,650.00
36,300.00
109,450.00

CALCULATION OF MATERAL VARIANCES

1) MATERIAL COST VARIANCE
ACTUAL COST OF MATERIAL USED - STD COST OF STD MATERIAL
122,400.00

99,500.00

22,900.00 Adverse

2) MATERIAL PRICE VARIANCE

ACTUAL COST OF MATERIAL USED - STD COST OF MATERIAL USED
122,400.00
3) MATERIAL USAGE VARIANCE

112,900.00

9,500.00 Adverse

STD COST OF MATERIAL USED - STD COST OF STD MATERIAL

112,900.00

99,500.00

13,400.00 Adverse

4) MATERIAL MIX VARIANCE

STD COST OF MATERIAL USED - STD COST OF MATERIAL USED IN STD MIX
112,900.00

109,450.00

3,450.00 Adverse

5) MATERIAL YIELD VARIANCE

STD COST OF MATERIAL USED AS PER STD MIX - STD COST OF STD MATERIAL IN STD MIX
109,450.00

99,500.00

9,950.00 Adverse

SUMMERY OF MATERIAL VARIANCES

PRICE VARIANCE
ADD: USAGE VARIANCE
I) MIX VARIANCE
II) YIELD VARIANCE

9,500.00
3,450.00
9,950.00
13,400.00

22,900.00
122,400.00
for our checking purpose tally with our material used
*****************************========================*************************************================
Wages
MATERIAL COST VARIANCE

100 SKILLED WORKMAN

40 SEMI SKILLED WORKMAN
60 UNSKILLED WORKMAN
but actual job complete
32 weeeks

time for Work completed

30 Weeks

60
36
24

& actual worker required are as follows

80 SKILLED WORKMAN
50 SEMI SKILLED WORKMAN
70 UNSKILLED WORKMAN

65
40
20

Find out
1) Labour cost variance
2) Labour rate variance
3) Labour mix variance
4) Labour efficiency variance

BASIC DATA
ACTUAL COST OF WAGES
Worker
Skilled
Semi Skilled
Unskilled

Actual Worker
Required
2,560.00
1,600.00
2,240.00

Wages Rate
65.00
40.00
20.00

Amount
166,400.00
64,000.00
44,800.00

STD COST OF WAGES

Price
60.00
36.00
24.00

Amount
153,600.00
57,600.00
53,760.00

6,400.00

275,200.00

264,960.00

STD COST OF STANDARD

WAGES
MATERIAL
Skilled
Semi Skilled
Unskilled

STD WAGES
(NOS)
3,000.00
1,200.00
1,800.00
6,000.00

Wages Rate
60.00
36.00
24.00

Amount
180,000.00
43,200.00
43,200.00
266,400.00

STANDARD COST OF WAGES USED IN STANDARD MIX

MATERIAL
ZEE
TEE
WEE

STD MIX UNITS

3,200.00
1,280.00
1,920.00
6,400.00

STD RATE
60.00
36.00
24.00

AMT
192,000.00
46,080.00
46,080.00
284,160.00

CALCULATION OF LABOUR VARIANCE

1) Labour cost variance
ACTUAL COST OF WAGES USED - STD COST OF STD WAGES
275,200.00

266,400.00

8,800.00 Adverse

2) Labour rate variance

ACTUAL COST OF WAGES USED - STD COST OF WAGES USED
275,200.00

264,960.00

10,240.00 Adverse

(1,440.00) Favorable

3) Labour mix variance

STD COST OF WAGES USED - STD COST OF STD WAGES
264,960.00

266,400.00

4) WAGES MIX VARIANCE

STD COST OF WAGES USED - STD COST OF WAGES USED IN STD MIX
264,960.00

284,160.00

(19,200.00) Favorable

5) WAGES YIELD VARIANCE

STD COST OF WAGES USED AS PER STD MIX - STD COST OF STD WAGES IN STD MIX
284,160.00

266,400.00

17,760.00 Adverse

SUMMERY OF WAGES VARIANCES

PRICE VARIANCE
ADD: USAGE VARIANCE

10,240.00

I) MIX VARIANCE
II) YIELD VARIANCE

(19,200.00)
17,760.00
(1,440.00)
8,800.00

WAGES COST VARIANCE

*****************************========================*************************************================
ICWAI JUNE 2002
A Certain insecticide is manufactured by mixing 4 chemicals A B C & D (filter) & processing the same.
the standard cost data for the product are as follows

QTY

MATERIAL
A
B
C
D (FILTER)
TOTAL INPUT
LOSS IN PROCESSING
OUTPUT
During April 2002,
A

5.00
20.00
25.00
50.00
100.00
5.00
95.00

STD (Price/kgs
proportion)
200.00
50.00
20.00
7.00

18500 kgs of insecticide was produced incurring actual cost as follows

AMT
1,010.00 KGS
210,000.00

4,200.00 KGS
4,800.00 KGS
10,200.00 KGS

B
C
D

205,000.00
100,000.00
68,000.00

Calculate the following variances duly reconcilling them

(a) Material cost
(b) material price
(c) material mix
(d) material yield
(e) material usage
ACTUAL COST OF MATERIAL
USED
MATERIAL
A
B
C
D

MATERIAL
USED (UNITS)
1,010.00
4,200.00
4,800.00
10,200.00
20,210.00

Price
207.92
48.81
20.83
6.67

Amount
210,000.00
205,000.00
100,000.00
68,000.00
583,000.00

STD COST OF STANDARD

MATERIAL
MATERIAL
A
B

STD QTY
(UNITS)
5.00
20.00

Price
200.00
50.00

Amount
1,000.00
1,000.00

STD COST OF MATERIAL USED

Price
200.00
50.00
20.00
7.00

Amount
202,000.00
210,000.00
96,000.00
71,400.00
579,400.00

C
D
Loss in Process

25.00
50.00
(5.00)
95.00

20.00
7.00

500.00
350.00
2,850.00

555,000.00

STANDARD COST OF MATERIAL USED IN STANDARD MIX

MATERIAL

STD MIX UNITS

A
1,063.68
B
4,254.74
C
5,318.42
D
10,636.84
(1,063.68)
Loss in Process
20,210.00

STD RATE
200.00
50.00
20.00
7.00

AMT
212,736.84
212,736.84
106,368.42
74,457.89
606,300.00

CALCULATION OF MATERAL VARIANCES

1) MATERIAL COST VARIANCE
ACTUAL COST OF MATERIAL USED - STD COST OF STD MATERIAL
583,000.00

555,000.00

28,000.00 Adverse

2) MATERIAL PRICE VARIANCE

ACTUAL COST OF MATERIAL USED - STD COST OF MATERIAL USED
583,000.00

579,400.00

3,600.00 Adverse

3) MATERIAL USAGE VARIANCE

STD COST OF MATERIAL USED - STD COST OF STD MATERIAL
579,400.00

555,000.00

24,400.00 Adverse

4) MATERIAL MIX VARIANCE

STD COST OF MATERIAL USED - STD COST OF MATERIAL USED IN STD MIX
579,400.00

606,300.00

page 381 SCANNER

(26,900.00)

5) MATERIAL YIELD VARIANCE

STD COST OF MATERIAL USED AS PER STD MIX - STD COST OF STD MATERIAL IN STD MIX
606,300.00

555,000.00

51,300.00

SUMMERY OF MATERIAL VARIANCES

PRICE VARIANCE
ADD: USAGE VARIANCE
I) MIX VARIANCE
II) YIELD VARIANCE

3,600.00
(26,900.00)
51,300.00
24,400.00

MATERIAL COST VARIANCE

28,000.00

*****************************========================*************************************================
CS FINAL JUNE 1982
The standard cost of material for manufacturing a unit of a particular product PEE is eastimated as follows.
16 kgs of Raw Material @ Rs.1 per kgs.
On completion of the units, it was found that 20kgs of Raw Material costing Rs.1.50 per kgs has been consumed
compute material variance
Solution
Suppose Particular product is X
BASIC DATA
ACTUAL COST OF MATERIAL
STD COST OF MATERIAL USED
USED
MATERIAL
MATERIAL
Price
Amount
Price
Amount
USED (UNITS)
X
20.00
1.50
30.00
1.00
20.00
20.00
30.00
20.00
STD COST OF STANDARD
MATERIAL
MATERIAL
X

STD QTY
(UNITS)
16.00
16.00

Price

Amount
1.00

STANDARD COST OF MATERIAL USED IN STANDARD MIX

16.00
16.00

MATERIAL
X

STD MIX UNITS

20.00
17.60

STD RATE
1.00

AMT
20.00
20.00

CALCULATION OF MATERAL VARIANCES

1) MATERIAL COST VARIANCE
ACTUAL COST OF MATERIAL USED - STD COST OF STD MATERIAL
30.00

16.00

14.00 Adverse

2) MATERIAL PRICE VARIANCE

ACTUAL COST OF MATERIAL USED - STD COST OF MATERIAL USED
30.00

20.00

10.00 Adverse

3) MATERIAL USAGE VARIANCE

STD COST OF MATERIAL USED - STD COST OF STD MATERIAL
20.00

16.00

4) MATERIAL MIX VARIANCE

STD COST OF MATERIAL USED - STD COST OF MATERIAL USED IN STD MIX

4.00 Adverse

20.00

20.00

5) MATERIAL YIELD VARIANCE

STD COST OF MATERIAL USED AS PER STD MIX - STD COST OF STD MATERIAL IN STD MIX
20.00

16.00

4.00

SUMMERY OF MATERIAL VARIANCES

PRICE VARIANCE
ADD: USAGE VARIANCE
I) MIX VARIANCE
II) YIELD VARIANCE

10.00
4.00
4.00
14.00

MATERIAL COST VARIANCE

*****************************========================*************************************================
CA INTER NOV 1974
Given that the cost standards for material consumption are
compute the variance when actual are
Qty (Kgs)
Rate (Rs.)
Total Amt
48.00
10.00
480.00
a)
40.00
12.00
480.00
b)
48.00
12.00
576.00
c)
36.00
10.00
360.00
d)

40 kgs @

10 Rs. per KG

SOLUTION
ACTUAL COST OF MATERIAL
USED
MATERIAL
A
B
C
D

MATERIAL
USED (UNITS)
48.00
40.00
48.00
36.00
172.00

Price
10.00
12.00
12.00
10.00

Amount
480.00
480.00
576.00
360.00
1,896.00

STD COST OF STANDARD

MATERIAL
MATERIAL
X

STD QTY
(UNITS)
40.00
40.00

Price

Amount

10.00

400.00
400.00

STANDARD COST OF MATERIAL USED IN STANDARD MIX

MATERIAL
A

STD MIX UNITS

172.00

STD RATE
10.00

172.00
CALCULATION OF MATERAL VARIANCES

AMT
1,720.00
1,720.00

STD COST OF MATERIAL USED

Price
10.00
10.00
10.00
10.00

Amount
480.00
400.00
480.00
360.00
1,720.00

1) MATERIAL COST VARIANCE

ACTUAL COST OF MATERIAL USED - STD COST OF STD MATERIAL
A
B
C
D

480.00
480.00
576.00
360.00

400.00
400.00
400.00
400.00

=
=
=
=

80.00
80.00
176.00
(40.00)

Adverse
Adverse
Adverse
Favorable

2) MATERIAL PRICE VARIANCE

ACTUAL COST OF MATERIAL USED - STD COST OF MATERIAL USED
A
B
C
D

480.00
480.00
576.00
360.00

480.00
400.00
480.00
360.00

=
=
=
=

80.00 Adverse
96.00 Adverse
-

3) MATERIAL USAGE VARIANCE

STD COST OF MATERIAL USED - STD COST OF STD MATERIAL
A
B
C
D

480.00
400.00
480.00
360.00

400.00
400.00
400.00
400.00

=
=
=
=

80.00 Adverse
80.00 Adverse
(40.00) Favorable

*****************************========================*************************************================
CA INTER 1975
A manufacturing concern which has adopted standard costing furnishes the following information
Standard
Material for
Price of Material

70 kgs. Finished products

Rs.

100 kgs
1 per kgs

Actual
210,000.00 kgs
280,000.00 kgs
252,000.00

Output
Material used
Cost of Material
Calculate
a) Material usage variance
b) Material price variance
c) Material cost variance
Solution
Working Note:Material for
Actual Output

70 kgs. Finished products

100 kgs
210,000.00 kgs

300,000.00 kgs

So Standard Qty

ACTUAL COST OF MATERIAL

USED
MATERIAL

MATERIAL
USED (UNITS)
280,000.00
280,000.00

Price

Amount
0.90

252,000.00
252,000.00

STD COST OF STANDARD

MATERIAL
MATERIAL

STD QTY
(UNITS)
300,000.00
300,000.00

Price

Amount
1.00

300,000.00
300,000.00

STANDARD COST OF MATERIAL USED IN STANDARD MIX

MATERIAL

STD MIX UNITS

280,000.00

STD RATE
1.00

280,000.00
CALCULATION OF MATERAL VARIANCES

AMT
280,000.00
280,000.00

STD COST OF MATERIAL USED

Price

Amount
1.00

280,000.00
280,000.00

1) MATERIAL COST VARIANCE

ACTUAL COST OF MATERIAL USED - STD COST OF STD MATERIAL
252,000.00

300,000.00

(48,000.00) F

2) MATERIAL PRICE VARIANCE

ACTUAL COST OF MATERIAL USED - STD COST OF MATERIAL USED
252,000.00

280,000.00

(28,000.00) F

3) MATERIAL USAGE VARIANCE

STD COST OF MATERIAL USED - STD COST OF STD MATERIAL
280,000.00

300,000.00

(20,000.00) F

*****************************========================*************************************================
ICWA INTER JUNE 1973
The standard cost of certain chemical mixture is
Material Rate
40%
A
20 Per tonn
60%
B
30 Per tonn

Standard Loss on production

10%

During the priod of one month for

182 tonns
Qty
Units Material Rate Units
90 tonns
A
18 Per tonn
110 tonns
B
34 Per tonn

production purpose used material, details are as follows

Calculate
a) Material cost variance
b) material price variance
c) material mix variance
d) material yield variance
Name of the material

Standard
Qty (Units)
Price (Rs.)
80.00
20.00
120.00
30.00

A
B

Actual
Qty (Units)
Price (Rs.)
90.00
18.00
110.00
34.00
200.00

SOLUTIONS
BASIC DATA
ACTUAL COST OF MATERIAL
USED
MATERIAL
A
B

MATERIAL
USED (UNITS)
90.00
110.00

Price
18.00
34.00

Amount
1,620.00
3,740.00

STD COST OF MATERIAL USED

Price
20.00
30.00

Amount
1,800.00
3,300.00

200.00

5,360.00

5,100.00

STD COST OF STANDARD

MATERIAL
MATERIAL
A
B

STD QTY
(UNITS)
80.00
120.00
200.00

Price
20.00
30.00

Amount
1,600.00
3,600.00
5,200.00

STANDARD COST OF MATERIAL USED IN STANDARD MIX

MATERIAL
A
B

STD MIX UNITS

STD RATE

80.00
120.00
200.00

20.00
30.00

AMT
1,600.00
3,600.00
5,200.00

Std Loss on
Production
8.00
12.00
20.00

Actual
Production Mix
72.00
108.00
180.00

CALCULATION OF MATERAL VARIANCES

1) MATERIAL COST VARIANCE
ACTUAL COST OF MATERIAL USED - STD COST OF STD MATERIAL
5,360.00
2) MATERIAL PRICE VARIANCE

5,200.00

160.00 A

5,257.78

ACTUAL COST OF MATERIAL USED - STD COST OF MATERIAL USED

5,360.00

5,100.00

260.00 A

3) MATERIAL USAGE VARIANCE

STD COST OF MATERIAL USED - STD COST OF STD MATERIAL
5,100.00

5,200.00

(100.00) F

4) MATERIAL MIX VARIANCE

STD COST OF MATERIAL USED - STD COST OF MATERIAL USED IN STD MIX
5,100.00

5,257.78

(157.78) F

5) MATERIAL YIELD VARIANCE

STD COST OF MATERIAL USED AS PER STD MIX - STD COST OF STD MATERIAL IN STD MIX
5,257.78

5,200.00

57.78 A

SUMMERY OF MATERIAL VARIANCES

PRICE VARIANCE
ADD: USAGE VARIANCE
I) MIX VARIANCE

260.00
(157.78)

57.78

II) YIELD VARIANCE

(100.00)
160.00

MATERIAL COST VARIANCE

===========================================================================================
===========================================================================================
ICWA INTER
Consumption per

RM
A
B

100 units of products

Standard
Actual
Units
Rate
Units
Rate
40.00
50.00 50.00 50.00
60.00
40.00 60.00 45.00

SOLUTIONS
ACTUAL COST OF MATERIAL
USED
MATERIAL
A
B

MATERIAL
USED (UNITS)
50.00
60.00
110.00

Price
50.00
45.00

Amount
2,500.00
2,700.00
5,200.00

STD COST OF MATERIAL USED

Price
50.00
40.00

Amount
2,500.00
2,400.00
4,900.00

STD COST OF STANDARD

MATERIAL
MATERIAL
A
B

STD QTY
(UNITS)
40.00
60.00
100.00

Price
50.00
40.00

Amount
2,000.00
2,400.00
4,400.00

STANDARD COST OF MATERIAL USED IN STANDARD MIX

MATERIAL
A
B

STD MIX UNITS

STD RATE

44.00
66.00
110.00

50.00
40.00

AMT
2,200.00
2,640.00
4,840.00

CALCULATION OF MATERAL VARIANCES

1) MATERIAL COST VARIANCE
ACTUAL COST OF MATERIAL USED - STD COST OF STD MATERIAL
5,200.00

4,400.00

2) MATERIAL PRICE VARIANCE

ACTUAL COST OF MATERIAL USED - STD COST OF MATERIAL USED

800.00 A

5,200.00

4,900.00

300.00 A

3) MATERIAL USAGE VARIANCE

STD COST OF MATERIAL USED - STD COST OF STD MATERIAL
4,900.00

4,400.00

500.00 A

4) MATERIAL MIX VARIANCE

STD COST OF MATERIAL USED - STD COST OF MATERIAL USED IN STD MIX
4,900.00

4,840.00

60.00 A

5) MATERIAL YIELD VARIANCE

STD COST OF MATERIAL USED AS PER STD MIX - STD COST OF STD MATERIAL IN STD MIX
4,840.00

4,400.00

440.00

SUMMERY OF MATERIAL VARIANCES

PRICE VARIANCE
ADD: USAGE VARIANCE
I) MIX VARIANCE
II) YIELD VARIANCE

300.00
60.00
440.00
500.00

800.00

MATERIAL COST VARIANCE

===========================================================================================
===========================================================================================
From Following Data compute the material cost variances
Name of the material

Standard
Qty (Kgs)
Price (Rs.)
10.00
2.00
20.00
3.00
20.00
6.00

A
B
C

Actual
Qty (Kgs)
5.00
10.00
15.00

Price (Rs.)
3.00
6.00
5.00

SOLUTIONS
BASIC DATA
ACTUAL COST OF MATERIAL
USED
MATERIAL
A
B
C

MATERIAL
USED (kgs)
5.00
10.00
15.00
30.00

Price

Amount
3.00
6.00
5.00

15.00
60.00
75.00
150.00

STD COST OF MATERIAL USED

Price

Amount
2.00
3.00
6.00

10.00
30.00
90.00
130.00

STD COST OF STANDARD

MATERIAL
MATERIAL
A
B
C

STD QTY (kgs)

Price

10.00
20.00
20.00
50.00

Amount
2.00
3.00
6.00

20.00
60.00
120.00
200.00

STANDARD COST OF MATERIAL USED IN STANDARD MIX

MATERIAL
ZEE
TEE
WEE

STD MIX UNITS

6.00
12.00
12.00
30.00

STD RATE
2.00
3.00
6.00

AMT
12.00
36.00
72.00
120.00

CALCULATION OF MATERAL VARIANCES

1) MATERIAL COST VARIANCE
ACTUAL COST OF MATERIAL USED - STD COST OF STD MATERIAL
150.00
2) MATERIAL PRICE VARIANCE

200.00

(50.00) F

ACTUAL COST OF MATERIAL USED - STD COST OF MATERIAL USED

150.00

130.00

20.00 A

3) MATERIAL USAGE VARIANCE

STD COST OF MATERIAL USED - STD COST OF STD MATERIAL
130.00

200.00

(70.00) F

4) MATERIAL MIX VARIANCE

STD COST OF MATERIAL USED - STD COST OF MATERIAL USED IN STD MIX
130.00

120.00

10.00 A

5) MATERIAL YIELD VARIANCE

STD COST OF MATERIAL USED AS PER STD MIX - STD COST OF STD MATERIAL IN STD MIX
120.00

200.00

(80.00) F

SUMMERY OF MATERIAL VARIANCES

PRICE VARIANCE
ADD: USAGE VARIANCE
I) MIX VARIANCE
II) YIELD VARIANCE

20.00
10.00
(80.00)

(70.00)
(50.00)

MATERIAL COST VARIANCE

===========================================================================================
===========================================================================================
CA FINAL MAY 1980
ICWA Final
The standard material cost for
Chemical
A
B
C
in a batch
Chemical
A
B
C

100 kg of chemical D is made up for

Kgs
Rate
30
4 Per Kg
40
5 Per Kg
80
6 Per Kg
150
500 kg of chemical D were produced from a mix of
Kgs
Cost
140
588
220
1056
440
2860

How do the yield, mix & the price factors contribute to the variance in the actual cost per 100 kgs of chemical D over the
standard cost.
Solution
Working Notes

Find out Actual Qty

A
B
C

Chemical
A
B
C

500 kg of chemical D were produced from a mix of

Then
100 kg of chemical D were produced from a mix of
Qty
28.00
44.00
88.00
Standard cost of Material used
Actual cost of Material used
Amount
Amount
Qty
Rate
Rate
117.60
112.00
28.00
4.20
4.00
211.20
220.00
44.00
4.80
5.00
572.00
528.00
88.00
6.50
6.00
900.80
860.00
160.00

Standard cost of material used in standard Mix

Chemical
A
B
C

Qty
32
43
85
160

Rate
4.00
5.00
6.00

Amount
128.00
213.33
512.00
853.33

CALCULATION OF MATERAL VARIANCES

1) MATERIAL COST VARIANCE
ACTUAL COST OF MATERIAL USED - STD COST OF STD MATERIAL

?????

STD COST OF STD Material used

Amount
Qty
Rate
120.00
30
4.00
200.00
40
5.00
480.00
80
6.00
800.00
150

900.80

800.00

100.80 A

2) MATERIAL PRICE VARIANCE

ACTUAL COST OF MATERIAL USED - STD COST OF MATERIAL USED
900.80

860.00

40.80 A

3) MATERIAL USAGE VARIANCE

STD COST OF MATERIAL USED - STD COST OF STD MATERIAL
860.00

800.00

60.00 A

4) MATERIAL MIX VARIANCE

STD COST OF MATERIAL USED - STD COST OF MATERIAL USED IN STD MIX
860.00

853.33

6.67 A

5) MATERIAL YIELD VARIANCE

STD COST OF MATERIAL USED AS PER STD MIX - STD COST OF STD MATERIAL IN STD MIX
853.33

SUMMERY OF MATERIAL VARIANCES

800.00

53.33 A

PRICE VARIANCE
ADD: USAGE VARIANCE
I) MIX VARIANCE
II) YIELD VARIANCE

40.80
6.67
53.33
60.00
100.80

MATERIAL COST VARIANCE

===========================================================================================
===========================================================================================
CS FINAL DEC 1982
Mixer Ltd.
Producing a standard mix using
Production Loss

115 kgs

Calculate material variance

Solution
Working Note

X
Y

Rate
5
10

Qty
Units
80 kgs
of chemcal
70 kgs
of chemcal

X
Y

Rate
4.5
8

30%

Actual Mix

Actual yield

Qty
Units
60 kgs
of chemcal
40 kgs
of chemcal

Actual mix is more then STD mix then find out Actual STD mix
Present STD Mix
Actual Mix Figure
150
60
X
40
Y
100
Actual Cost of Material
STD cost of Material
Chemical
Cost
Cost
Qty
Rate
Rate
X
360.00
400.00
80
4.5
5
Y
560.00
700.00
70
8
10
920.00
1,100.00
150

New STD Mix

90.00
60.00
STD cost of STD Material
Cost
Qty
Rate
450.00
90
5
600.00
60
10
1,050.00
150

Standard cost of material used in standard Mix

Chemical
X
Y

Qty
69
46
115

Amount
345.00
460.00
805.00

Rate
5.00
10.00

CALCULATION OF MATERAL VARIANCES

1) MATERIAL COST VARIANCE
ACTUAL COST OF MATERIAL USED - STD COST OF STD MATERIAL
920.00
2) MATERIAL PRICE VARIANCE

1,050.00

(130.00) F

ACTUAL COST OF MATERIAL USED - STD COST OF MATERIAL USED

920.00

1,100.00

(180.00) F

3) MATERIAL USAGE VARIANCE

STD COST OF MATERIAL USED - STD COST OF STD MATERIAL
1,100.00

805.00

295.00 A

4) MATERIAL MIX VARIANCE

STD COST OF MATERIAL USED - STD COST OF MATERIAL USED IN STD MIX
1,100.00

805.00

295.00 A

5) MATERIAL YIELD VARIANCE

STD COST OF MATERIAL USED AS PER STD MIX - STD COST OF STD MATERIAL IN STD MIX
805.00

1,050.00

(245.00) F

SUMMERY OF MATERIAL VARIANCES

PRICE VARIANCE
ADD: USAGE VARIANCE
I) MIX VARIANCE
II) YIELD VARIANCE

(180.00)
295.00
(245.00)

50.00
(130.00)

MATERIAL COST VARIANCE

===========================================================================================
===========================================================================================
STD Material cost
Produce a tonne of chemical X
Material
A
B
C

Units
Kgs
Kgs
Kgs

Qty
Rate
30000
10
40000
5
50000
6
120000
Calculate Price, Usage & Mix variance

Actual
Produce a 100 tonne of chemical X
Material
A
B
C

Units
Qty
Rate
Tonnes
35 9000
Tonnes
42 6000
Tonnes
53 7000

Working Note
130000
Actual Convert in kgs
Material
Units
A
Kgs
B
Kgs
C
Kgs

Qty
Rate
35000
9.00
42000
6.00
53000
7.00

STD (If produce 100 toons

Material
Units
Qty
Rate
A
Kgs
32500 10.00
B
Kgs
43333
5.00
C
Kgs
54167
6.00

ACTUAL COST OF MATERIAL

USED
MATERIAL
A
B
C

MATERIAL
USED (UNITS)
35,000.00
42,000.00
53,000.00
130,000.00

Price

Amount
9.00
6.00
7.00

315,000.00
252,000.00
371,000.00
938,000.00

STD COST OF STANDARD

MATERIAL
MATERIAL
A
B
C

STD QTY
(UNITS)
30,000.00
40,000.00
50,000.00
120,000.00

Price
10.00
5.00
6.00

Amount
300,000.00
200,000.00
300,000.00
800,000.00

STANDARD COST OF MATERIAL USED IN STANDARD MIX

MATERIAL
A
B
C

STD MIX UNITS

32,500.00
43,333.33
54,166.67
130,000.00

STD RATE
10.00
5.00
6.00

CALCULATION OF MATERAL VARIANCES

AMT
325,000.00
216,666.67
325,000.00
866,666.67

STD COST OF MATERIAL USED

Price
10.00
5.00
6.00

Amount
350,000.00
210,000.00
318,000.00
878,000.00

1) MATERIAL COST VARIANCE

ACTUAL COST OF MATERIAL USED - STD COST OF STD MATERIAL
938,000.00

800,000.00

138,000.00 A

2) MATERIAL PRICE VARIANCE

ACTUAL COST OF MATERIAL USED - STD COST OF MATERIAL USED
938,000.00

878,000.00

60,000.00 A

3) MATERIAL USAGE VARIANCE

STD COST OF MATERIAL USED - STD COST OF STD MATERIAL
878,000.00

800,000.00

78,000.00 A

4) MATERIAL MIX VARIANCE

STD COST OF MATERIAL USED - STD COST OF MATERIAL USED IN STD MIX
878,000.00

866,666.67

11,333.33 A

5) MATERIAL YIELD VARIANCE

STD COST OF MATERIAL USED AS PER STD MIX - STD COST OF STD MATERIAL IN STD MIX

866,666.67

800,000.00

66,666.67 A

SUMMERY OF MATERIAL VARIANCES

PRICE VARIANCE
ADD: USAGE VARIANCE
I) MIX VARIANCE
II) YIELD VARIANCE

60,000.00
11,333.33
66,666.67
78,000.00

MATERIAL COST VARIANCE

138,000.00

===========================================================================================
===========================================================================================
Following are the particulars in respect of a product where 2 types of material A & B are used
Material
Standard
Actual
Input
Tons
Tons
Rate
Rate
A
120.00 10.00
140.00
9.50
B
80.00
60.00
7.50
9.00
200.00
200.00
Less
20.00
18.00
Net Production
180.00
182.00
You are required to calculate
1) Material Price variance
2) Material Mix variance

3) Material yield variance

ACTUAL COST OF MATERIAL
USED
MATERIAL
A
B
Less

MATERIAL
USED (UNITS)
140.00
60.00
(18.00)
182.00

Price

Amount
9.50
9.00
-

1,330.00
540.00
1,870.00

STD COST OF STANDARD

MATERIAL
MATERIAL
A
B
Less

STD QTY
(UNITS)
120.00
80.00
(20.00)
180.00

Price
10.00
7.50
-

Amount
1,200.00
600.00
1,800.00

STANDARD COST OF MATERIAL USED IN STANDARD MIX

MATERIAL
A
B
Less

STD MIX UNITS

121.33
80.89
(20.22)
182.00

STD RATE
10.00
7.50

AMT
1,213.33
606.67
1,820.00

STD COST OF MATERIAL USED

Price
10.00
7.50
-

Amount
1,400.00
450.00
1,850.00

CALCULATION OF MATERAL VARIANCES

1) MATERIAL COST VARIANCE
ACTUAL COST OF MATERIAL USED - STD COST OF STD MATERIAL
1,870.00

1,800.00

70.00 A

2) MATERIAL PRICE VARIANCE

ACTUAL COST OF MATERIAL USED - STD COST OF MATERIAL USED
1,870.00

1,850.00

20.00 A

3) MATERIAL USAGE VARIANCE

STD COST OF MATERIAL USED - STD COST OF STD MATERIAL
1,850.00

1,800.00

50.00 A

4) MATERIAL MIX VARIANCE

STD COST OF MATERIAL USED - STD COST OF MATERIAL USED IN STD MIX
1,850.00
5) MATERIAL YIELD VARIANCE

1,820.00

30.00 A

STD COST OF MATERIAL USED AS PER STD MIX - STD COST OF STD MATERIAL IN STD MIX
1,820.00

1,800.00

20.00 A

SUMMERY OF MATERIAL VARIANCES

PRICE VARIANCE
ADD: USAGE VARIANCE
I) MIX VARIANCE
II) YIELD VARIANCE

20.00
30.00
20.00
50.00
70.00

MATERIAL COST VARIANCE

===========================================================================================
===========================================================================================
CA INTER MAY 1980
Vinak Ltd.
Produces an article by blending 2 basic Raw Material. It operates a standard costing systems & the following standards have
been set for Raw Materials
Material
A
B

STD Mix
40%
60%

Price
4.00
3.00

Standard Loss is

15%

During April 1980 the company produced

1700 kgs of finished output
The position of stock & purchase for the month of april 1980 is as under
Material
A
B

Stock 01.04.80
kgs
35.00
40.00

Stock 30.04.80
kgs
5.00
50.00

Purchase during april 1980

kgs
Cost
800.00
3,400.00
1,200.00
3,000.00
2,000.00

4.25
2.50

Solution
Working Note
Total Production April 1980
Total Production
STD Loss
Means Actual Production
So STD Mix

1700
100%
15%
85%
2000

ACTUAL COST OF MATERIAL

USED
MATERIAL

MATERIAL
USED (UNITS)

Price

Amount

STD COST OF MATERIAL USED

Price

Amount

A (Opening)
A
B (Opening)
B

35.00
795.00
40.00
1,150.00
2,020.00

4.00
4.25
3.00
2.50

140.00
3,378.75
120.00
2,875.00
6,513.75

STD COST OF STANDARD

MATERIAL
MATERIAL
A
B

STD QTY
(UNITS)
800.00
1,200.00
2,000.00

Price

Amount
4.00
3.00

3,200.00
3,600.00
6,800.00

STANDARD COST OF MATERIAL USED IN STANDARD MIX

MATERIAL
A
B

STD MIX UNITS

808.00
1,212.00
2,020.00

STD RATE
4.00
3.00

AMT
3,232.00
3,636.00
6,868.00

CALCULATION OF MATERAL VARIANCES

1) MATERIAL COST VARIANCE
ACTUAL COST OF MATERIAL USED - STD COST OF STD MATERIAL

4.00
4.00
3.00
3.00

140.00
3,180.00
120.00
3,450.00
6,890.00

6,513.75

6,800.00

(286.25) F

2) MATERIAL PRICE VARIANCE

ACTUAL COST OF MATERIAL USED - STD COST OF MATERIAL USED
6,513.75

6,890.00

(376.25) F

3) MATERIAL USAGE VARIANCE

STD COST OF MATERIAL USED - STD COST OF STD MATERIAL
6,890.00

6,800.00

90.00 A

4) MATERIAL MIX VARIANCE

STD COST OF MATERIAL USED - STD COST OF MATERIAL USED IN STD MIX
6,890.00

6,868.00

22.00 A

5) MATERIAL YIELD VARIANCE

STD COST OF MATERIAL USED AS PER STD MIX - STD COST OF STD MATERIAL IN STD MIX
6,868.00

SUMMERY OF MATERIAL VARIANCES

6,800.00

68.00 A

PRICE VARIANCE
ADD: USAGE VARIANCE
I) MIX VARIANCE
II) YIELD VARIANCE

(376.25)
22.00
68.00
90.00
(286.25)

MATERIAL COST VARIANCE

===========================================================================================
===========================================================================================
ICWA INTER 1979
XY LTD.
Manufacturing of product P uses a standard cost systems.
Standard product & cost specification for
1000 kg of product are as follows.
Ingredients
A
B
C
Input
Output

Qty (Kgs)
800.00
200.00
200.00
1,200.00

Price per Kgs

2.50
4.00
1.00
2.50

Cost
2,000.00
800.00
200.00
3,000.00

1,000.00

3.00

3,000.00

Material Record indicate (Consumption in January)

Ingredients
A

Qty (Kgs)
157,000.00

Price per Kgs

2.40

Cost
376,800.00

B
C
Input

38,000.00
36,000.00
231,000.00

4.20
1.10
2.49

159,600.00
39,600.00
576,000.00
200,000.00 kg

Actual Finished Production for the month of January is

Solution

ACTUAL COST OF MATERIAL

USED
MATERIAL
A
B
C

MATERIAL
USED (UNITS)
157,000.00
38,000.00
36,000.00
231,000.00

Price

Amount
2.40
4.20
1.10

376,800.00
159,600.00
39,600.00
576,000.00

STD COST OF STANDARD

MATERIAL
MATERIAL
A
B
C

STD QTY
(UNITS)
160,000.00
40,000.00
40,000.00
240,000.00

Price

Amount
2.50
4.00
1.00

400,000.00
160,000.00
40,000.00
600,000.00

STANDARD COST OF MATERIAL USED IN STANDARD MIX

STD COST OF MATERIAL USED

Price

Amount
2.50
4.00
1.00

392,500.00
152,000.00
36,000.00
580,500.00

MATERIAL
A
B
C

STD MIX UNITS

154,000.00
38,500.00
38,500.00
231,000.00

STD RATE
2.50
4.00
1.00

AMT
385,000.00
154,000.00
38,500.00
577,500.00

CALCULATION OF MATERAL VARIANCES

1) MATERIAL COST VARIANCE
ACTUAL COST OF MATERIAL USED - STD COST OF STD MATERIAL
576,000.00

600,000.00

(24,000.00) F

2) MATERIAL PRICE VARIANCE

ACTUAL COST OF MATERIAL USED - STD COST OF MATERIAL USED
576,000.00

580,500.00

(4,500.00) F

3) MATERIAL USAGE VARIANCE

STD COST OF MATERIAL USED - STD COST OF STD MATERIAL
580,500.00
4) MATERIAL MIX VARIANCE

600,000.00

(19,500.00) F

STD COST OF MATERIAL USED - STD COST OF MATERIAL USED IN STD MIX
580,500.00

577,500.00

3,000.00 A

5) MATERIAL YIELD VARIANCE

STD COST OF MATERIAL USED AS PER STD MIX - STD COST OF STD MATERIAL IN STD MIX
577,500.00

600,000.00

(22,500.00) F

SUMMERY OF MATERIAL VARIANCES

PRICE VARIANCE
ADD: USAGE VARIANCE
I) MIX VARIANCE
II) YIELD VARIANCE

(4,500.00)
3,000.00
(22,500.00)
(19,500.00)

MATERIAL COST VARIANCE

(24,000.00)

===========================================================================================
===========================================================================================
CA FINAL NOV 1978
The standard material cost for a normal mix of

1 tonne of chemical X is based on

Chemical
A
B
C
During a month
Chemical
A
B
C

Usage (kg)
240.00
400.00
640.00
6.25 tones
Consumption
(Tonnes)
1.60
2.40
4.50

Rate
6.00
12.00
10.00
of x were produced from
Cost
11,200.00
30,000.00
47,250.00

Solution
1 tones =
1000 kgs
Working Note
Standard material cost for
6.25 tones of X
Chemical
Usage (kg)
Total Toons
Rate per Tones
Cost
A
240.00
1.50
6,000.00
9,000.00
37.50
B
400.00
2.50
12,000.00
30,000.00
75.00
C
640.00
4.00
10,000.00
40,000.00
62.50
ACTUAL COST OF MATERIAL
STD COST OF MATERIAL USED
USED
MATERIAL
MATERIAL
Price
Amount
Price
Amount
USED (UNITS)
A
1,600.00
7.00
11,200.00
6.00
9,600.00
B
2,400.00
12.50
30,000.00
12.00
28,800.00
C
4,500.00
10.50
47,250.00
10.00
45,000.00

8,500.00

88,450.00

83,400.00

STD COST OF STANDARD

MATERIAL
MATERIAL
A
B
C

STD QTY
(UNITS)
240.00
400.00
640.00
1,280.00

Price

Amount

6.00
12.00
10.00

9,000.00
30,000.00
40,000.00
79,000.00

STANDARD COST OF MATERIAL USED IN STANDARD MIX

MATERIAL
A
B
C

STD MIX UNITS

1,171.88
1,953.13
3,125.00
6,250.00

STD RATE
6.00
12.00
10.00

AMT
7,031.25
23,437.50
31,250.00
61,718.75

CALCULATION OF MATERAL VARIANCES

1) MATERIAL COST VARIANCE
ACTUAL COST OF MATERIAL USED - STD COST OF STD MATERIAL
88,450.00

79,000.00

9,450.00 A

2) MATERIAL PRICE VARIANCE

ACTUAL COST OF MATERIAL USED - STD COST OF MATERIAL USED
88,450.00

83,400.00

5,050.00 A

3) MATERIAL USAGE VARIANCE

STD COST OF MATERIAL USED - STD COST OF STD MATERIAL
83,400.00

79,000.00

4,400.00 A

4) MATERIAL MIX VARIANCE

STD COST OF MATERIAL USED - STD COST OF MATERIAL USED IN STD MIX
83,400.00

61,718.75

21,681.25

5) MATERIAL YIELD VARIANCE

STD COST OF MATERIAL USED AS PER STD MIX - STD COST OF STD MATERIAL IN STD MIX
61,718.75

79,000.00

(17,281.25)

SUMMERY OF MATERIAL VARIANCES

PRICE VARIANCE
ADD: USAGE VARIANCE

5,050.00

I) MIX VARIANCE
II) YIELD VARIANCE

21,681.25
(17,281.25)
4,400.00

MATERIAL COST VARIANCE

9,450.00

===========================================================================================
===========================================================================================

ICWA INTER JUNE 1975

Standard set for material consumption was

100 kg @Rs.

2.25 per kgs

100 kg @Rs.
500 kg @Rs.
110 kg @Rs.

2.25 per kgs

2.15 per kgs

In a cost period
Opening Stock
Purchase
Consumption

Calculate
a) Usage variance
b) Price variance
i) When variance is calculated at point of purchase
ii) When variance is calculated at point of issue on FIFO basis
iii) When variance is calculated at point of issue on LIFO basis
c)
What is the effect on closing stock valuation when material are charged out to cost on basis
ii) and
iii) above
Solution
a) Usage variance

b) Price variance

= Standard Price x (standard qty - actual qty)

22.50
i) When variance is calculated at point of purchase
= Actual Qty x (Std price - Actual Price)
50.00
ii) When variance is calculated at point of issue on FIFO basis

Total Consumtion

110 Kgs

Opening Stock
Puchase

100 Kgs
10 Kgs

Less:- Standard Price

x
x

2.25 per kgs =

2.15 per kgs =

110 Kgs
x
2.25 per kgs
Price Variance is calculated at point of issue on FIFO basis

225.00
21.50
246.50
247.50
1.00

iii) When variance is calculated at point of issue on LIFO basis

Total Consumtion

110 Kgs

Purchase

Less:- Standard Price

c)

110 Kgs

2.15 per kgs =

110 Kgs
x
2.25 per kgs
Price Variance is calculated at point of issue on LIFO basis

What is the effect on closing stock valuation when material are charged out to cost on basis

ii) Effect on valuation of closing stock (FIFO method)

Opening Stock
Purchase
Less:- Consumption
Closing Stock

100 kg @Rs.
500 kg @Rs.
600
-110 kg @Rs.
490

2.25 per kgs

2.15 per kgs

236.50
236.50
247.50
11.00

Valuation as per FIFO Rate

Less:- Standard Rate

Total Valuation

2.15 per kgs

2.25 Per kgs
0.10
49.00

iii) Effect on valuation of closing stock (LIFO method)

Opening Stock
Purchase
Less:- Consumption
Closing Stock
Valuation as per LIFO
100 Kgs Qty Rate
390 Kgs Qty Rate

100 kg @Rs.
500 kg @Rs.
600
-110 kg @Rs.
490

2.25
2.15

Standard Rate
2.25
2.25

2.25 per kgs

2.15 per kgs

Diff
0.10

Valuation
39.00
39.00

=================================================================================
=================================================================================

Illustration No.1] Calculate Material Variances from the following details.

Standard quantity of materials for producing 1 unit of finished product P is 5 kg. The
standard price is Rs.6 per kg. During a particular period, 500 units of P were produced.
Actual material consumed was 2700 kg at a cost of Rs.16, 200.
Solution
Standard Qty
Standard price Rs.
Production
Units
Consumption of RM
Consumption Cost

5 kgs
6 per kgs
500
2700 kgs
16,200.00

Calculate material variance

Material cost variance

Material price variance

Standard cost of Material

15,000.00

Actual cost
16,200.00

Actual Qty

(Standard price - Acutal

Price)

2,700.00

Material Qty Variance

Standard Price

1,200.00

(Standard Qty - Acutal

Qty)

6.00
200.00
x
*********************************===============================************************************============

1,200.00

Illustration 2] The standard material cost to produce a ton of chemical X is given below:
300 kg of material A @ Rs.10 per kg
400 kg of material B @ Rs.5 per kg
500 kg of material C @ Rs.6 per kg
During a particular period,
100 tons of mixture X was produced from the usage of
35 tons of material A @ Rs.9, 000 per ton
42 tons of material B @ Rs.6, 000 per ton
53 tons of material C @ Rs.7, 000 per ton
Calculate material cost, price, and usage and mix variances.
Solution
Working Summery
ACTUAL COST OF MATERIAL
STD COST OF MATERIAL USED
USED
MATERIAL
A
B
C

MATERIAL
USED (kgs)
35,000.00
42,000.00
53,000.00
130,000.00

Price

Amount
9.00
6.00
7.00

315,000.00
252,000.00
371,000.00
938,000.00

STD COST OF STANDARD

MATERIAL
MATERIAL
A

STD QTY (kgs)

30,000.00

Price
10.00

Amount
300,000.00

Price
10.00
5.00
6.00

Amount
350,000.00
210,000.00
318,000.00
878,000.00

B
C

40,000.00
50,000.00
120,000.00

5.00
6.00

200,000.00
300,000.00
800,000.00

STANDARD COST OF MATERIAL USED IN STANDARD MIX

MATERIAL
A
B
C

STD MIX UNITS

32,500.00
43,333.33
54,166.67
130,000.00

STD RATE
10.00
5.00
6.00

AMT
325,000.00
216,666.67
325,000.00
866,666.67

CALCULATION OF MATERAL VARIANCES

1) MATERIAL COST VARIANCE
ACTUAL COST OF MATERIAL USED - STD COST OF STD MATERIAL
938,000.00

800,000.00

138,000.00

2) MATERIAL PRICE VARIANCE

ACTUAL COST OF MATERIAL USED - STD COST OF MATERIAL USED
938,000.00

3) MATERIAL USAGE (QTY) VARIANCE

878,000.00

60,000.00

STD COST OF MATERIAL USED - STD COST OF STD MATERIAL

878,000.00

800,000.00

78,000.00

4) MATERIAL MIX VARIANCE

STD COST OF MATERIAL USED - STD COST OF MATERIAL USED IN STD MIX
878,000.00

866,666.67

11,333.33

5) MATERIAL YIELD VARIANCE

STD COST OF MATERIAL USED AS PER STD MIX - STD COST OF STD MATERIAL IN STD MIX
866,666.67

800,000.00

66,666.67

SUMMERY OF MATERIAL VARIANCES

PRICE VARIANCE
ADD: USAGE VARIANCE
I) MIX VARIANCE
II) YIELD VARIANCE

60,000.00
11,333.33
66,666.67
78,000.00

MATERIAL COST VARIANCE

138,000.00

*********************************===============================************************************============
Illustration 3] S.V. Ltd. manufactures a single product, the standard mix of which are as follows:

Material A 60% at Rs.20 per kg

Material B 40% at Rs.10 per kg
Normal loss in the production is 20% of input. Due to shortage of material A, the standard mix was
changed and the actual mix was as follows:
Material A 105 kg at Rs.20 per kg
Material B 95 kg at Rs.9 per kg
Actual loss was 35 kg, while the actual output was 165 kg
Calculate all material variances.
Solution
Working Summery
ACTUAL COST OF MATERIAL
STD COST OF MATERIAL USED
USED
MATERIAL
A
B
Actual Loss

MATERIAL
USED (kgs)
105.00
95.00
(35.00)
165.00

Price
20.00
9.00

Amount
2,100.00
855.00
2,955.00

STD COST OF STANDARD

MATERIAL
MATERIAL
A
B

STD QTY %
60.00
40.00

Price
20.00
10.00

Amount
1,200.00
400.00

Price
20.00
10.00

Amount
2,100.00
950.00
3,050.00

Normal Loss

(20.00)
80.00

1,600.00

STANDARD COST OF MATERIAL USED IN STANDARD MIX

MATERIAL
A
B
Normal Loss

STD MIX UNITS

123.75
82.50
(41.25)
165.00

STD RATE
20.00
10.00
-

AMT
2,475.00
825.00
3,300.00

CALCULATION OF MATERAL VARIANCES

1) MATERIAL COST VARIANCE
ACTUAL COST OF MATERIAL USED - STD COST OF STD MATERIAL
2,955.00

1,600.00

1,355.00

2) MATERIAL PRICE VARIANCE

ACTUAL COST OF MATERIAL USED - STD COST OF MATERIAL USED
2,955.00

3,050.00

3) MATERIAL USAGE VARIANCE

STD COST OF MATERIAL USED - STD COST OF STD MATERIAL

(95.00)

3,050.00

1,600.00

1,450.00

4) MATERIAL MIX VARIANCE

STD COST OF MATERIAL USED - STD COST OF MATERIAL USED IN STD MIX
3,050.00

3,300.00

(250.00)

5) MATERIAL YIELD VARIANCE

STD COST OF MATERIAL USED AS PER STD MIX - STD COST OF STD MATERIAL IN STD MIX
3,300.00

1,600.00

1,700.00

SUMMERY OF MATERIAL VARIANCES

PRICE VARIANCE
ADD: USAGE VARIANCE
I) MIX VARIANCE
II) YIELD VARIANCE

(95.00)
(250.00)
1,700.00
1,450.00

MATERIAL COST VARIANCE

1,355.00

*********************************===============================************************************============

ICWA INTER DEC 1974

Calculate Standard Labour time for machining part No.Z 235 from following data
Standard Batch Size
Set up time

100.00 Pieces
64.00 minuts

Operation time (each piece)

Fixing job on machine
cutting time
Removing job from machine
Allow
Allow

2.00 minuts
10.00 minuts
3.00 minuts

10% on total operation time for inspection during process &

5% on total time for fatigue

Solutions
Computation of Standard Labour Time
Total Operation time for each piece
Fixing job on machine
cutting time
Removing job from machine

2.00
10.00
3.00
15.00

minuts
minuts
minuts
minuts

Total operation time for 100 piece

Time for inspection
Set up time
Total Time
Add: 5% of fatigue time
Standard time for 100 pieces

==========================================================================
==========================================================================
ICWA INTER JUNE 1975
Standard hours for manufacturing 2 products

Products
M
N

Hours
15
20

Standard Rate
5
5

Standard Rate
5

In the year 1974

Products
M
N

Units
10,000.00
15,000.00
450,500.00
2,300,000.00

Actual Total Labour hours

Actual wages Bill
Rate of per Hours
Hours
Rate
12,000.00
7
9,400.00
7.5
429,100.00
5

84000
70500
2145500

You are required to compute the labour variancs

Solutions
1) LABOUR COST VARIANCE
ACTUAL COST OF WAGES USED - STD COST OF STD WAGES
2,300,000.00

2,250,000.00

x
x
x

7.00
7.50
5.00

5.00 =
5.00 =
5.00 =

2) LABOUR RATE VARIANCE

Actual hours x (STD Rate - Actual Rate)
12,000.00
9,400.00
429,100.00

50,000.00

3) LABOUR EFFICIENCY VARIANCE

STD Rate x (STD time - Actual time)
5

450,500.00

450,000.00

VERIFICATION (ANSWER IS RIGHT OR WRONG)

LABOUR RATE VARIANCE
ADD:- LABOUR EFFICIENCY VARIANCE
LABOUR COST VARIANCE

50,000.00

==========================================================================
==========================================================================
ICWA INTER DEC 1975
From the data given below, calculate labour variances for the 2 departments

ACTUAL GROSS WAGES (DIRECT)

STD HOURS PRODUCED

STD RATE PER HR

ACTUAL HOURS WORKED

DEPT A
2,000.00
8,000.00
0.30
8,200.00

Rs.
HR
RS.
HR

DEPT B
1,800.00
6,000.00
0.35
5,800.00

ACTUAL COST OF WAGES USED

MATERIAL
A
B

MATERIAL
USED (UNITS)
8,200.00
5,800.00
14,000.00

Price

Amount
0.24
0.31

2,000.00
1,800.00
3,800.00

STD COST OF STANDARD WAGES

MATERIAL
A

STD QTY
(UNITS)
8,000.00

Price

Amount
0.30

2,400.00

STD COST OF WA
Price
0.30
0.35

6,000.00
14,000.00

0.35

2,100.00
4,500.00

CALCULATION OF MATERAL VARIANCES

1) LABOUR COST VARIANCE
ACTUAL COST OF WAGES USED - STD COST OF STD WAGES
3,800.00

4,500.00

(700.00)

(690.00)

(10.00)

2) LABOUR RATE VARIANCE

ACTUAL COST OF WAGES USED - STD COST OF WAGES USED
3,800.00

4,490.00

3) LABOUR EFFICIENCY VARIANCE

STD COST OF WAGES USED - STD COST OF STD WAGES
4,490.00

4,500.00

SUMMERY OF MATERIAL VARIANCES

PRICE VARIANCE
ADD: USAGE VARIANCE
I) MIX VARIANCE

(10.00)

MATERIAL COST VARIANCE

==========================================================================
==========================================================================
The direct labour strength of a section of an Engg factory is
Worker Qty
Wages Rate

100
6 per day of

8 hours

48

1000 pices
48 hours

Normal Production
time

per week

Particluars Week
Complete Order pieces
Wages Hr
7650

Rate of Wages
Rate of Wages

1500

Rate
HR
Means
6300 Normal Rate
1350 Overtime wages @ double rate

Rate is
6
12

Calculate
a) Avg labour cost per piece during the week
b) analyse the labour cost variance for the week
Solutions
ACTUAL COST OF WAGES USED
MATERIAL
A

MATERIAL
USED (UNITS)
1,500.00
1,500.00

Price

Amount
36.00

54,000.00
54,000.00

STD COST OF STANDARD WAGES

MATERIAL
A
B

STD QTY
(UNITS)
1,000.00
1,000.00

Price

Amount
48.00
-

48,000.00
48,000.00

CALCULATION OF MATERAL VARIANCES

1) LABOUR COST VARIANCE
ACTUAL COST OF WAGES USED - STD COST OF STD WAGES

STD COST OF WA
Price
48.00

54,000.00

48,000.00

6,000.00

(18,000.00)

24,000.00

2) LABOUR RATE VARIANCE

ACTUAL COST OF WAGES USED - STD COST OF WAGES USED
54,000.00

72,000.00

3) LABOUR EFFICIENCY VARIANCE

STD COST OF WAGES USED - STD COST OF STD WAGES
72,000.00

48,000.00

SUMMERY OF MATERIAL VARIANCES

PRICE VARIANCE
ADD: USAGE VARIANCE
I) MIX VARIANCE

MATERIAL COST VARIANCE

24,000.00

Labour Time

1,500.00
150.00
64.00
1,714.00
85.70
1,799.70

minuts
minuts
minuts
minuts
minuts

==================================
==================================

Same rate

50,000.00

24,000.00
23,500.00
47,500.00

2,500.00

47,500.00
2,500.00

50,000.00
==================================
==================================

*
*
*
*
STD COST OF WAGES USED
Price

Amount
0.30
0.35

2,460.00
2,030.00
4,490.00

(700.00)

(690.00)

(10.00)

(690.00)
(10.00)
(10.00)
(700.00)

==================================
==================================

STD COST OF WAGES USED

Price
48.00

Amount
72,000.00
72,000.00

36.00

6,000.00

(18,000.00)

24,000.00

(18,000.00)
24,000.00
24,000.00
6,000.00