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**Unformatted text preview: **Solutions of Standard Costing
Ans.2
Working Notes
(1) For actual (standard) output of 85 kgs. Std. Input is 100 kgs. 100kgs
For actual output of 1,700 kgs. the Std. input = 1700kgs
=2,000 kgs. 85kgs (2) 2,000 kgs of standard input for an actual output of 1,700 kgs. Contains the Materials A and B in the proportion of
(40:60) i.e., 800 kgs. of A and 1,200 kgs. of Material B.
(3) Actual Material consumption for 1,700 kgs. of actual output
Particulars (Kgs.)
Materials
A B Stock on 1-9-2004
Add: Purchase during Sept. 2004 35
800
835
5
830 Less: Stock on 30-09-2004
Material consumed during Sept.2004 40
1,200
1,240
50
1,190 (4) Calculation actual purchase price per kg. of material
A = Rs.3400 Rs.4.25 800kgs B = Rs.3000 Statement shoeing Standard and Actual Cost of Actual output
Material
Standard
Quantity
Rate
Amount
Kg.
Rs.
Rs.
A
800
4
3,200
B 1,200 3 Rs.2.50 1200kgs 3,600 40 2,000
300
1,700 6,800 Calculation of Material Variances
(a) Material price variance
Actual quantity (Std. price – Actual Price)
A = [35 (4 – 4)] + [ 795 ( 4 – 4.25)]
B = [40 ( 3 – 3)] +[1,150 ( 3 – 2.50 )] =Rs.198.75
=Rs. 575 (b) Material Usage variance
Std. rate (Std. quantity – Actual Quantity)
A = 4 (800 – 830)
B = 3 (1,200 – 1,190) =Rs.120
=Rs. 30 (c) Material Yield Variance
Std. rate of output (Actual yield – Std. Yield)
=[Rs.6,800 x ( 1,700 kg. – 1,717 kg.)]
1,700
* Std. Yield = Actual std Output
Std. Input Amount
Rs.
140.00
3,378.75 4.25
3.00 1190 1150 Loss
Output Actual
Rate
Rs.
4.00 Quantity
Kg.
35
830
795 120.00
2,875.00 2.50 2,020
320
1,700 6,513.75 (A)
(F) =Rs.376.25 (F) (A)
(F) =Rs.90 (A) =Rs.68 (A) Actual input = (d) Material Mix Variance
Actual Quantity ( Std. cost of Std. mix per kg. – Std. cost of actual mix per kg. ) 85kgs
100kgs 2020kgs 1717kgs = 2020 kgs Rs. 6800 Rs. 6890* =Rs.22(A) 2000 kgs 2020 kgs *[(830 kgs. x Rs.4)] + [(1,190 kgs x Rs.3 )] =Rs.6,890 (e) Total Materials Cost Variance
Std. Cost – Actual Cost
=Rs.6,800 – Rs.6,513.75 =Rs.286.25 (F) Summary of Material variance
Price variance
Usage variance
1. Yield variance
2. Mix variance
Total Material cost variance (Rs.)
376.25 (F)
68 (A)
22 (A) 90 (A)
286.25 (A) Ans. 3: Working Note: Standard cost
Component A
B Actual cost Revised std.quantity Qty. Rate Amount Qty. Rate Amount Oty. Kg. Rs. Rs. Kg. Rs. Rs. Kg. 48 10 480 72
(B.F.) 12 864 54 112 30 224 108 8 864 126 704 180 1728 180 5,360 — Total Input 160 (-) Loss 16(10%) 36 Total output 144 144 Solution (i) Mix variance = Std. price (Revised Std. quantity – Actual quantity)
A: 10 × (54-72)
= 180 (A)
B: 2 × (126-108) = 36 (F)
144 (A) (ii) Yield variance = Std. price of yield (Actual yield – Std. yield for actual
mix)
= Rs. 880
180 × (144 –180×90%) = Rs. 88 (A) (iii) Price variance =Actual qty. (Std. price – Actual price.)
A: 72 × (10-12) = 144 (A)
B: 108 × (2-8)
= 648 (A)
792 (A) (iv) Total usage variance = Std. price (Std. qty. – Actual qty.)
A: 10 × (48-72) = 240 (A)
B: 2 × (112-108) =
8 (F)
232 (A) Ans. 4: Take the good output of 182 kgs. The standard quantity of material required for 182 kg. of output is 182 100 202.22
90
Statement showing the standard and actual costs and standard cost of actual mix
Standard cost
Component Actual cost Qty. Rate Kg. Rs. Rs. 80.89 60 4,853.40 B (60% of
202.22 kg.) 121.33 30 3,639.90 110 Total Input 202.22 8,493.30 200 (-) Loss 20.22 18 Total output 182.00 182 A (40% of Amount Revised std.quantity Qty. Rate Amount Oty. Kg. Rs. Rs. Kg. 90 18 1,620 80 34 3,740 120 5,360 200 5,360 — 202.22 kg.) Standard yield in actual input is 90 % of 200 kg. i.e. 180 kg.
Variances :
(i) Price variance =Actual qty. (Std. price – Actual price.)
A: 90 × (60-18) = 3780 (F)
B: 110 × (30-34) = 440 (A)
3340 (F) (ii) Total usage variance = Std. price (Std. qty. – Actual qty.)
A: 60 × (80.89-90)
= 546.60 (A)
B: 30 × (121.33-110) = 339.90 (A)
206.70 (A) (iii) Mix variance = Std. price (Revised Std. quantity – Actual quantity)
A: 60 × (80-90)
= 600 (A)
B: 30 × (120-110) = 300 (F)
300 (A) (iv) Yield variance = Std. price of yield (Actual yield – Std. yield for actual
mix)
= Rs. (v) Total variance 8493.30
182 × (182 – 182
202.22 200 ) = Rs. 93.30 (F) = Std. cost – Actual cost
= Rs. 8,493.30 – Rs. 5,360 = Rs. 3133.30 (F) Note : (iii) and (iv) above are subparts of total usage variance
Proof : Price variance + Mix variance + Yield variance = Total variance
Rs. 3340 (F) + Rs.300 (A) + Rs. 93.30 (F) = Rs. 3133.30 (F) Ans. 5: Working Notes :
(i) Since the actual output is 1,000 units, the standard quantity of materials required for the actual
output is 1,000 units × 4 kgs. = 4,000 kgs.
(ii) Statement showing computation of standard cost, standard cost of actual quantity and actual
cost. Material Std. cost
per Kg. Actual
cost per
Kg. Std. qty
in Kgs. Actual qty
in Kgs. Std. cost
(Std. qty
× Std.
price)
Rs. Std. cost of
actual qty.
(Actual
qty. × Std.
price) Rs. Actual
cost (Actual
qty. × Actual
price)
Rs. f = a×d g = b×d Rs. Rs. a b c d e = a×c A 1.25 1.30 1,200 1,180 1,500 1,475 1,534 B
C 1.50
3.50 1.80
3.40 1,600
800 1,580
830 2,400
2,800 2,370
2,905 2,844
2,822 D 3.00 3.00 400 440 1,200 1,320 1,320 4,000 4,030 7,900 8,070 8,520 (iii) Standard cost per unit of the standard mix
Rs. 7,900
4,000 Kgs. = Rs.1.975 = (iv) Standard cost per unit of the actual mix = Rs.8070 Rs.2.002 4030kgs
Variances:
(i) Price variance = Actual qty. (Std. price – Actual price)
= Rs.8,070 – Rs. 8,520 = Rs. 450 (A) (ii) Mix variance = Total actual qty. (Std. cost per unit of
std.mix – Std. cost per unit of actual mix)
= 4,030 Kgs. (Rs. 1.975 – Rs. 2.002) = Rs. 110 (A) (iii) Sub usage variance = Std. price per unit of std. mix (Total std. qty –
Total actual qty.)
= Rs. 1.975 (4,000 – 4,030) = Rs. 60.00 (A) (iv) Total material cost variance = Std. cost – Actual cost
= Rs. 7,900 – Rs.8,520 = Rs. 620 (A)
Proof : Price variance + Mix variance + Sub-usage variance = Total variance Rs. 450 (A) + Rs. 110 (A) + Rs. 60 (A) = Rs. 620 (A)
Note : ‘Mix variance’ and sub usage variance are sub-part of total usage variance which may
be calculated as below:
Usage variance = Std. price (Std. qty. – Actual qty.)
= Standard cost – Standard cost of actual quantity
= Rs. 7,900 – Rs. 8,070 = Rs. 170 (A) Ans.6
Basic data for calculation of Labour variances
Category of Workmen
Standard
Weeks Rate
Amount
Rs.
Rs.
Skilled
3,000
60
1,80,000
Semi – Skilled
1,200
36
43,200
Unskilled
1,800
24
43,200
Total
6,000
2,66,400 Actual
Rate
Rs. Weeks
2,560
1,600
2,240
6,400 65
40
20 Amount
Rs.
1,66,400
64,000
44,800
2,75,200 Calculation of Labour variances
(1)
Direct Labour Cost Variance
Std. cost for actual output – Actual Cost
=2,75,200 – 2,66,400 (2) (3) (a) Direct Labour Rate Variance
Actual time (Std. rate – Actual rate)
Skilled
= 2,560 (60 – 65)
Semi – Skilled
=1,600 (36 – 40)
Unskilled
=2,240 (24 – 20) =Rs.8,800 (A) =Rs.12,800 (A)
=Rs. 6,400 (A)
=Rs. 8,960 (F) =Rs.10,240(A) Direct Labour Efficiency Variance
Std. rate ( Std. time for actual output – Actual time)
Skilled
=60(3,000 -2,560 )
=Rs.26,400 (F)
Semi – Skilled
=36 (1,200 -1,600)
=Rs.14,400 (A)
Unskilled
=24 (1,800 – 2,240)
=Rs.10,560(A)
Direct Material efficiency Variance can be further analysed into:
Direct Labour Mix Variance
Std. rate ( Revised Std. time – Actual time)
Skilled
=60(3,200 -2,560 )
Semi – Skilled
=36 (1,280 -1,600)
Unskilled
=24 (1,920 – 2,240)
* Revised Std. time =Rs.38,400 (F)
=Rs.11,520 (A)
=Rs. 7,680 (A) Skilled =6,400 x 3,000
6,000 =3,200 Semi- skilled =6,400 x 1,200
6,000 =1,280 Unskilled =6,400 x 1,800
6,000
(b)
Direct Labour Revised Efficiency variance
Std. rate ( Std. time for actual output –Revised Std. time)
Skilled
=60(3,000 -3,200 )
Semi – Skilled
=36 (1,200 -1,280)
Unskilled
=24 (1,800 – 1,920)
Summary of Labour variances
Rate variance
Efficiency variance
(a) Mix variance
(b) Revised efficiency variance
Direct Material cost variance =Rs.1,440(F) =Rs.19,200 (F) =1,920 =Rs.12,000 (A)
=Rs. 2,880 (A)
=Rs. 2,880 (A) =Rs.17,760(A)
(Rs.)
10,240 (A) 19,200 (F)
17,760 (A) Ans. 7: In a 40 hour week, the standard gang should have produced 1,000 std. hours as
shown below:
Gang: Skilled 16 No. of workers × 40 hrs. 640 Semi - skilled 6 No. of workers × 40 hrs. 240 Unskilled 3 No. of workers × 40 hrs. 120 1,440 (F)
8,800 (A) 1,000 hours
However, the actual output is 900 standard hours. Hence to find out the total labour cost
variance, the standard cost (or cost charged to production) is to be computed with reference to 900
standard hours. This is done in the following statement:
Statement showing the Standard cost, Actual cost and
Standard cost of Actual time for Actual output, i.e. 900
Standard hours.
Gang Standard cost Actual cost Hours Rate
Rs. Amount
Rs. Hours Standard cost of
Actual time
Rate Amount Hours Rate Amount
Rs
Rs.
Rs. Rs. Skilled
600 900 1000
Semi-skilled
240 576 3 1,728 14×40 = 560 2,240 560 3 1,680 9 × 40 = 360 3 1,080 360 2 720 2 × 40 = 80 2 160 80 1 80 3.48 3,480 1,000 2.48 2,480 900 1000 216 2 432 108 1 108
2,268 Unskilled
120 4 900 1000 900 2.52 1,000 Variances:
(i) = Actual time (Std. rate – Actual rate)
= (Standard cost of actual time – Actual cost)
= Rs. 2,480 – Rs.3,480 = Rs. 1,000 (A) Rate variance (ii) Gang variance = Total actual time ( Std. rate of std. gang–
Std. rate of actual gang)
= 1,000 (Rs. 2.52 – Rs. 2.48) = Rs. 40(F) (iii) Sub-efficiency variance = Std. rate (Total std. time – Total actual time)
= Rs. 2.52 (900 hours – 1,000) = Rs. 252 (A) (iv) Total labour cost variance = Std. labour cost – Actual labour cost
= Rs. 2,268 – Rs. 3,480 = Rs. 1,212 (A) The gang composition variance may also be known as labour mix variance and is part of efficiency
variance which may be computed as under:
Efficiency variance = Std. rate (Std. time – Actual time)
= Standard cost – Std. cost of actual time
= Rs. 2,268 – Rs. 2,480 = Rs.212 (A) Ans. 8: Standard cost charged to production Rs. 5,000 (1,000 units× 2.5 hours × Rs.2)
Actual wages paid
Actual wage rate per hour (Rs. 4500÷2000)
Std. wage rate per hour
Abnormal idle time (25% of 2,000 hours)
Variances :
(i) Wage rate variance Rs. 4,500
Rs. 2.25
Rs. 2.00
500 hrs. = Actual time (Std.rate – Actual rate) = 2,000 hours (Rs.2 – Rs.2.25) = Rs.500 (A)
(ii) Efficiency variance = Std. rate (Std.time – Actual time*)
Rs.2 (2,500 hrs. –1500 hrs.) = Rs. 2,000 (F) (iii) Idle time variance = Idle time × Std.rate
= 500 hrs. × Rs. 2 = Rs. 1,000 (A) (iv) Total variance = Std.labour cost – Actual labour cost
Rs. 5,000 – Rs. 4,500 = Rs. 500 (F) *Actual time less idle time. Ans.9
Basic data for Standard and actual labour cost of producing 1,000 articles of ‘A’ and standard cost of actual
labour hours
Standard Cost
Actual Cost
Labour
Hours
Rate
Amount
Hours
Rate
Amount
Std. cost of
Rs.
Rs.
Rs.
Rs.
actual
labour
hours (
Actual
hours x
Std. rate)Rs
Skilled
10,000
3.00
30,000
9,000
4.00
36,000
27,000
Semi – Skilled
8,000
1.50
12,000
8,400
1.50
12,600
12,600
Unskilled
16,000
1.00
16,000
20,000
0.90
18,000
20,000
Total
34,000
58,000
37,400
66,600
59,600
Calculation of Labour variances
(1)
Labour Cost Variance
Std. cost – Actual Cost
=Rs.58,000 – Rs.66,600 (2) Labour Rate Variance
Actual Hours (Standard rate – Actual rate)
OR
Std. cost of actual hours – Actual Cost
=Rs.59,600 – Rs.66,600 (3) =Rs.7,000 (A) Labour Efficiency Variance
Std. rate of Std. mix (Total Std. hours for actual output – Total Actual hours)
= (4) =Rs.8,600 (A) Rs. 58000 34000 37400 34000 =Rs.5,800(A) Labour Mix Variance
Total actual hours ( Std. rate of standard mix – Std. rate of actual mix)
= 34000 58000 59600 34000 37400
Summary of Labour variances
Rate variance
Efficiency variance
Mix variance
Labour Cost variance =Rs.4,200(F)
(Rs.)
7,000 (A)
5,800 (A)
4,200 (F)
8,600 (A) Ans. 10: (i) Variable overhead variance: = (Standard variable overhead Actual variable overhead)
= (Rs. 2,40,000 – Rs. 2,00,000) = Rs. 40,000 (Favourable)
(Refer to Working note 1)
(ii) Variable overhead budget variance:
= (Budgeted variable overhead for actual hours – Actual variable overhead)
= Rs. 2,24,000 – Rs. 2,00,000 = Rs. 24,000 (Favourable)
(Refer to Working note 2)
(iii) Variable overhead efficiency variance:
= Standard variable overhead rate per hour [Std. hours for actual output – Actual hours]
= Rs. 2 [1,20,000 hours – 1,12,000 hours]
= Rs.2 × 8,000 hours = Rs. 16,000 (Favourable)
Working notes:
(1) Standard variable overhead
= Standard cost of actual output = 20,000 units × 6 hours × Rs. 2
= Rs. 2,40,000 (2) Budgeted variable overhead (for actual hours)
= 1,12,000 hours × Rs.2 = Rs.2,24,000 Ans. 11: Actual output = 9,000 units
Idle time = 5,000 hours
Production time (Actual) = 1,05,000 hours
Standard hours for actual production = 10 hours / unit 9,000 units = 90,000 hours. Labour efficiency variance = 3,75,000 (A)
i.e. Standard rate (Standard Production time – Actual production time) = 3,75,000(A). SR (90,000 – 1,05,000) = – 3,75,000
SR 3,75,000
15,000 Rs. 25 (i) Idle time variance = 5,000 hours 25 Rs. / hour = 1,25,000. (A) (ii) Standard Variable Overhead = Rs. 150 / unit
Standard hours = 10 hours / unit
Standard Variable Overhead rate / hour = 150 / 10 = Rs. 15 / hour
Total Variable Overhead variance = Standard Variable Overhead – Actual Variable Overhead
= Standard Rate Standard hours – Actual rate Actual hours
= (15) (10 9,000) – 16,00,000 = 13,50,000 – 16,00,000 Total Variable Overhead Variance = 2,50,000 (A)
(iii) Variable Overhead Expenditure Variance = (Standard Rate Actual Hours) – (Actual Rate = (15 1,05,000) – 16,00,000 = 15,75,000 – 16,00,000 Actual Hours) =
(iv) Variable Overhead Efficiency Variance = Standard Rate 25,000 (A)
(Standard Hours for actual output – Actual hours for Actual output)
= 15 (90,000 – 1,05,000) = 15 (–15,000) = 2,25,000 (A) (b) Alternative Solution
Actual Output = 9,000 Units
Idle time = 5,000 hrs
Direct Wages Paid = 1,10,000 hours @ Rs. 22 out of which 5,000 hours being idle, were not recorded in production.
Standard hours = 10 per unit. Labour efficiency variance = Rs. 3,75,000 (A)
or
Standard Rate (Standard Time – Actual Time) = – 3,75,000
Or Standard Rate = Rs 25/(i)
25 Idle time variance = Standard Rate Idle time 5,000 = Rs 1,25,000 (A) (ii) Standard Variable Overhead / unit = 150
Standard Rate = 150 Rs.15/hour 10
Standard Quantity = 10 hours
Actual Variable Overhead
Standard Variable Overhead = 150 = 16,00,000
9,000 = 13,50,000 Actual Variable Overhead = 16,00,000 Total Variable Overhead Variance = 2,50,000 (A) (iii) Variable Overhead expenditure = Standard Variable Overhead for
actual hours – Actual Variable
Overhead
= (150 1,05,000) – 16,00,000 = 15,75,000 – 16,00,000 = 25,000 (A) (iv) Variable overhead efficiency variance = Standard Variable Overhead for actual output
Standard Variable Overhead for Actual hours) = 15 (10 hours
1,05,000) = 15 (90,000 – 1,05,000) =
= 15 (–15,000)
2,25,000 (A) 90,000 units – Ans.12: Computation of standard cost and actual cost
Standard Cost
Direct Materials
Direct Labour
Variable Overheads
Total standard Costs
Actual Costs
Direct Materials (6,000 x Rs.12)
(6,000 x Rs.4.40)
(6,000 x Rs.3)
(a)
(12,670meters x Rs.5.70) 72,000
26,400
18,000
1,16,400 – Direct Wages
Variable Overheads
Total Actual Costs
Total Variance 72,219
27,950
20,475
1,20,644
4,244,(A) (b)
(a)-(b) Computation of Missing figures
(1) Actual Labour hours
Standard variable overhead rate hour (Standard hours – Actual hours) = Rs.1,500 (A)
Rs.1,500 A
=Rs.3 (6,000 x 1 hour – Actual hours)
Rs.1,500 A
=Rs.18,000 –(Rs.3 x actual hours)
(Rs.3 x Actual hours)
=Rs.18,000 + Rs.1,500
Actual hours
=Rs.19,500 / 3 = 6,500 hours
(2) Actual Wage rate hour = Actual wages paid
=Rs.27,950
Total Actual hours
6,500 hours
Computation of Material Labour and Variable Overhead Variances
1. Material variances
(1) Material Cost Variance
Standard Cost- Actual Cost
=(Rs.72,000 – Rs.72,219)
(2) Material Price Variance
Actual Quantity of Material consumed (Std, price- Actual Price)
=12,670 meters (Rs.6- Rs.5.70)
(3) Material Usage Variance
Standard price (Standard Quantity –Actual Quantity)
=Rs.6 (12,000 metres -12,670 metres)
2. Labour Variances =Rs.4.3 =Rs.219 (A) =Rs.3,801 (F) =Rs.4,020 (A) (1) Labour Cost Variance
Standard Cost- Actual Cost
=(Rs.26,400 – Rs.27,950)
(3) Labour Rate Variance
Actual hours (Std. wage rate per hour- Actual wage rate per hour)
=6,500 hours (Rs.4.40- Rs.4.30)
(3) Labour Efficiency Variance
Standard rate per hour (Standard hours –Actual hours)
=Rs.4.40 (6,000 hours- 6,500 hours)
Variable Overhead Variances 3. =Rs.1,550 (A) =Rs.650 (F) =Rs.2,200 (A) (1) Total Variable overhead Variance
Standard Variable Overhead- Actual Variable Overhead
=Rs.18,000 – Rs.20,475
(4) Variable overhead Efficiency Variance
Standard Variable overhead rate per hour (Std. hours for actual output-Actual hours)
=Rs.3 ( 6,000 – 6,500)
(3) Variable overhead Budget Variance
Budgeted variable overhead –Actual variable overhead)
=(Actual hours worked x Std. variable overhead per hour) – Actual variable overhead
=(6,500 x Rs.3 ) – Rs.20,475
Note: (F) denoted Favourable Variance; (A) denoted Adverse Variance Ans 13:
Working Notes :
1. Standard cost of raw-material consumed : Rs. Total standard cost of ZED (1,000 units × Rs.21)
Less: Standard cost : Labour Rs.
21,000 8,000 =Rs.2,475 (A) =Rs.1,500 (A) =Rs.975 (A) Overheads 1,600 9,600
11,400 Standard cost of raw materials used
2. Standard cost of raw–material per finished unit. 3. Standard quantity of raw - material per finished unit and total quantity of raw material
required: Total quantity – 3.8 kg. × 1,000 units = 3,800 kgs.
4. Total material cost variance :
Actual cost of raw material
Standard cost of raw material Rs.10,000
Rs.11,400 Total material cost variance
5. Actual quantity (A Q) of raw–material (in kgs): Rs. 1,400 (F) Material usage variance = Standard rate (Standard quantity – Actual quantity). or, Rs. 600
(A)
= Rs. 3 (3,800 Kgs. – AQ)
or, 3AQ
= 12,000 kgs. or, AQ = 4,000 kgs.
(Material usage variance is as given in the question and standard quantity is as per (3)
above )
6. Actual rate of raw material per kg 7. Standard direct labour rate
Standard direct labour hours = 1,600 (given) Standard direct labour cost 8. Actual labour cost and actual labour rate per hour:
Actual total cost of 1,000 units
1,000 units (Rs. 21 + Re. 0.07)
Less : Actual cost of material
Actual variable overheads
Actual direct labour cost Rs. 10,000
Rs. 1,62 = Rs. 8,000 (given) Rs. 21,070 Rs. 11,620
Rs. 9,450 9. Standard labour hours to produce one unit: 10. Standard labour cost per unit:
Standard labour cost per unit = 1.6 hours × Rs. 5 = Rs.8 11. Actual hourly rate of variable overheads (a) :
Standard qu antity of raw material per unit of ZED : 3.8 kg. (Refer to working note 3). (b) Standard direct labour rate per hour Rs. 5 (Refer to working note 7). (c) Standard direct material cost per unit of ZED : Rs. 11.40 (Refer to working note 2 ) . (d) Standard direct labour cost per unit of ZED: Rs. 8 (Refer to working note 10). (e) Standard total material cost for the output: Rs. 11,400 (Refer to working note 1). (f) Actual total direct labour cost for the output: Rs. 9,450 (Refer to working note 8). (g) Material price variance = Total material cost variance – Material usage variance.
= Rs. 1,400 (favourable)* – Rs. 600 (Adverse)
(*Refer to working note 4)
= Rs. 2000 (Favourable)
Alternatively,
= Actual quantity (Standard rate – Actual rate)
= 4,000 units (Rs. 3 – Rs. 2.50)* (* Refer to working note 6) = Rs. 2,000 (Favourable)
(h) Labour rate variance:
= Actual hours (Standard rate – Actual rate)
= 1,800 hours (Rs. 5 – Rs. 5.25)
= Rs. 450 (Adverse) (i) Labour efficiency variance: (j) Standard rate (Standard hours – Actual hours)
= Rs. 5 per hour (1,600 hours – 1,800 hours) = Rs. 1,000 (Adverse)
Variable overhead expenditure variance :
= Actual hours (Standard rate – Actual rate)
= 1,800 hours (Re. 1 – Re. 0.90)* = Rs. 180 (Favourable) (*Refer to working note) (k) Variable overhead efficiency variance
= Standard rate (Standard hours – Actual hours)
= Re. 1 per hour (1,600 hours – 1,800 hours) = Rs. 200 (Adverse) Ans. 14: Budgeted daily hours per day of June = 12000hrs 500hrs / day 24...

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- Spring '14
- Cost Accounting, Contribution Margin, Direct material price variance, actual output, Sales variance