Variance Analysis
(1) The standard material and standard cost per kg. of material required for the
production of one unit of product A is as follows:
Material 5 kg. Standard price Rs.5 per kg.
The actual production and related material data are as follows:
400 units of Product A Price of material Rs.4.80 per kg.
Material used 2200 kg.
Calculate (1) Material cost variance (2) Material Price variance and (3) Material usage
variance.
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(2) From the following you are required to calculate (a) (1) Material cost variance (2)
Material Price variance and (3) Material usage variance.
Quantity of material purchased 3000 units.
Value of material purchased Rs.9000
Standard quantity of material required for one tonne of finished product = 25
units.
Standard rate of material Rs.2 per unit.
Opening stock of material = nil.
Closing stock of material = 500 units.
Finished production during the period 80 tonnes.
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(3) To manufacture a product, the following standards have been set:
Direct materials:
2 units of P @ Rs.2 per unit. Rs.4.00
3 units of Q @ Rs.1.50 per unit. Rs.4.50
15 units of R @ Rs.0.50 per unit. Rs.7.50
Rs.16.00.
The company manufactured and sold 60000 units of the product during the year. Direct
material cost were as follows:
125000 units of P @ Rs.2.20 per unit. 885000 units of R @ Rs.0.60 per unit.
180000 units of Q @ Rs.1.40 per unit.
Calculate various material variances.
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(4) The Joga Manufacturing Company employs a standard cost system. The following
are the materials standards for one product:
Material Units Price per unit Amount
X 18 1.00 18.00
Y 9 0.80 7.20
Z 23 0.40 9.20
Rs.34.40
The standard mix is expected to produce 40 units of finished product. The actual results
for the period were:
Raw materials of 3 00 000 units were used as follows:
Material X 1 38 000 units @ Rs.1.10
Material Y 30 000 units @ Re.0.75
Material Z 1 32 000 units @ Re.0.45
The output of the finished product was 2 30 000 units.
Calculated various material variances.
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(5) standard cost card for product 'SIMCO' reveals:
Standard materials: 2 kg of A @ Rs. 2 per kg 1 kg of B @ Rs. 6 per kg.
Direct labour (3 hrs. @ Rs. 6 per hour
Variable overheads (3 hrs. @Rs.4 per direct labour hours.)
Total standard cost per unit
It is proposed to produce 10 000 units of SIMCO in the month of September and
budgeted cost based on the information contained in the standard cost card is as
follows:
Direct materials: A 20000 kg @ Rs.2 per kg. B 10000 kg @ Rs.6 per kg.
Direct labour (30000 hrs @ Rs.6 per hr.);
Variable overhead (30000 hrs. @ Rs.4 per direct labour hour)
The actual results are:
Direct materials: A 19000 kg @ Rs.2.20 per kg. B 10000 kg @ Rs.5.60 per kg.
Direct labour (28500hrs. @ Rs.6.40 per hour)
Total variable overheads Rs.104000/-
Actual production was 9000 units.
Calculate all possible variances.
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(6) S.V. Ltd. manufactures a single product, the standard mix of which is:
Material A 60% @ Rs.20 per kg. Material A 40% @ Rs.10 per kg.
Normal loss in production is 20% of input. Due to shortage of Material A, the
standard mix was changed. Actual results for March 1989 were:
Material A 105kg @ Rs.20 per kg. Material B 95kg @ Rs.9 per kg.
Input 200kg. Loss 35 kg. Output 165kg.
Calculate: (a) Material price variance (b) Material usage variance
(c) Material mix variance (d) Material yield variance
(e) Material cost variance
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(7) A gang of workers normally consists of 30 men, 15 women and 10 boys. They are
paid at standard hourly rates as under: Men - 0.80 Women - 0.60 Boys -
0.40.
In a normal working week of 40 hours, the gang is expected to produce 2000 units of
output.
During the week ending 31st December 2001 the gang consisted of 40 men, 10 women
and 5 boys. The actual wages paid were @ Re.0.70, Re.0.65 and Re.0.30 respectively;
four hours were lost due to abnormal idle time and 1600 units were produced.
Calculate:
(a) Labour cost variance (b) Labour rate variance (c) Labour efficiency variance
(d) Labour mix variance (e) Labour idle time variance
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