MMV = (Difference b/w Actual qty at actual mix and actual qty at std mix) x std rate
Working no.1:
Calculation of Standard Mixing Ratio:
Working no.2:
Calculation of actual quantity at actual mix:
Output ?
30,000 ### UF
32,000 ### UF
MPV ### Fav
Std. Material
Rate Mix Variance
UF 0.25 750 UF
1 Controllable Variance
a) Actual amount of factory overhead
Fixed FOH
Variable FOH 100,000
2 Volume Variance
a) Budget allowance based in standard hours allowed 120,000
3 - Variance method
1 Spending Variance
a) Actual amount of factory overhead
Fixed FOH
Variable FOH -
3 Efficiency Variance
a) Overhead charged to production (Based on Actual hours)
Actual hours allowed x
Total Standard Factory overhead rate -
Difference (900) U
Standard Rate 0.80
Difference 0.02 F
Actual Quantity purchased 100,000
Difference 0.05 F
Actual Quantity purchase 2,000
Difference 0.05 F
Actual Quantity issued 1,775
l quantity ISSUE
Solution of Ex -3
Difference 20 F
Standard Rate 6.75
Difference (0.15) u
Actual hours used 1,580
l hours used
Solution of Ex -4
1 Controllable Variance
a) Actual amount of factory overhead
1 Fixed FOH 4,500
2 Variable FOH 6,500
2 Volume Variance
a) Budgeted Factory overhead:
1 Fixed FOH 4,500
2 Variable FOH 6,750
VOLUME VARIANCE
3 - Variance method
1 Spending Variance
a) Actual amount of factory overhead
1 Fixed FOH
2 Variable FOH
3 Efficiency Variance
a) Overhead charged to production (Based on Actual hours)
Actual hours allowed x
Total Standard Factory overhead rate
4 - Variance method
1 Spending Variance
a) Actual amount of factory overhead
Fixed FOH
Variable FOH
b) Budget allowance based on actual hours
Fixed budgeted overhead
Variable budgeted OH
(Actual hours x 4,400
Variable per unit rate) 1.50
Spending Variance
Proof OR
Difference between actual hours and Standard hours x variable FOH rate
Proof OR
Difference between actual hours and Standard hours x Fixed FOH rate
(4500 hours std. - 4400 hours actual) x 0.90
Rs. 90 Fav.
Proof OR
Difference between actual hours and Normal capacity hours x Fixed FOH rate
11,000
11,250
(250) F
11,250
10,800
(450) U
4,500
6,500 11,000
11,100
(100) F
11,100
10,560
(540) U
10,560
dard hours)
4,500
2.40 10,800
(240) F
11,000
4,500
6,600 11,100
100 Fav
11,100
(11,100) Fav
90 Fav
3,960
540 Unfav
Material Conversion
Units completed & transferred out 7,830 7,830
Less: Opening stock (80) (80)
Difference 4,010 U
Standard Rate 3
Difference 0.04 U
Actual Quantity 192,410
Difference 210 F
Standard Rate 6.50
Difference 0.10 U
Actual hours used 46,830
1 Controllable Variance
a) Actual amount of factory overhead
Fixed FOH 11,250
Variable FOH 25,090
2 Volume Variance
a) Budget allowance based in standard hours allowed
antity used
36,340
34,770
1,570 U
34,770
35,280
510 F
Required no.1: Standard quantity allowed of material:
Note: Favourable hours = Rs. 800 efficiency variance / Rs. 4 per hour
= 200 hours
Note: Unfavourable rate = Rs. 760 labor rate variance / 3,800 actual hours worked
= 0.20
500
12,500
Aplha Beeta
Required (1):
Calculate a) Sales Price variance b) Sales volume variance
c) Cost price variance d) Cost volume variance
Required (2)
Sales mix and the final sales volume variance
Solution
Sales Price Variance:
(Actual quantity x Actual mix x Actual rate) - (Actual quantity x Actual mix x Std.
[(Actual qty x actual rate) + (actual qty x actual rate)] - [(Actual qty x std rate) + (
[(Actual Qty x std rate) + (Actual Qty x std. rate)] - [(Budgeted Qty x std rate) + (B
[(Actual Qty x std COGsrate) + (Actual Qty x std. COGSrate)] - [(Budgeted Qty x
(2,000 x 25)]
+ (3,500 x 25)]
x actual COGSrate)] - [(Actual qty x std COGSrate) + (actual qty x std COGSrate)]
std. COGSrate)] - [(Budgeted Qty x std COGS rate) + (Budgeted qty x std COGS rate)]
125,000
(100,000)
25,000
gross profit
(28,235.20)
(3,235.20) Unfav.
Aplha Beeta Total
Actual Sales 120 million @ Rs. 1.10 40 million @ Rs. 2.20 Rs. 220 million
Actual COGS 120 million @ Rs. 0.90 40 million @ Rs. 1.80 Rs. 180 million
Budgeted Sales 110 million @ Rs. 1.35 70 million @ Rs. 2.70 Rs. 337.50 million
Budgeted COGS 110 million @ Rs. 1.10 70 million @ Rs. 2.20 Rs. 275.00 million
Required (1):
Calculate a) Sales Price variance b) Sales volume variance
c) Cost price variance d) Cost volume variance
Required (2)
Sales mix and the final sales volume variance
Solution
Sales Price Variance:
(Actual quantity x Actual mix x Actual rate) - (Actual quantity x Actual mix x Std. rate)
[(Actual qty x actual rate) + (actual qty x actual rate)] - [(Actual qty x std rate) + (actual qty x std
[(Actual Qty x std rate) + (Actual Qty x std. rate)] - [(Budgeted Qty x std rate) + (Budgeted qty x s
270 - 337.50
67.50 (Unfavourable)
[(Actual qty x actual COGS rate) + (actual qty x actual COGSrate)] - [(Actual qty x std COGSrate)
40 Million (Favourable)
[(Actual Qty x std COGsrate) + (Actual Qty x std. COGSrate)] - [(Budgeted Qty x std COGS rate)
220 - 275
Rs. 55 (Favourable)
50
Less: Actual sales (both) x budgeted average gross profit
(120 m + 40 m) x 0.347 (55.52)
unfavourable
unfavourable
Required no. 1: Schedule of allocation of variance:
Material Variance
Inventory
WIP 60,000 4,500
FG 20,000 1,500
COGS 80,000 6,000
160,000 12,000
Labour Variance
Cost
WIP 20,000 1,200
FG 20,000 1,200
COGS 60,000 3,600
100,000 6,000
Sales 520,000
Less: Cost of goods sold (259,200)
1,500 6,000
1,200 3,600
720 3,600
1,200 6,000
4,620 19,200
Requried no.1: Material Price, Mix and Yeild variance:
A 2,200 2,150 50
C 1,200 1,250 50
Formula (Difference b/w actual qty used and actual qty at std mix) x Standa
A 1,870 50 1,705
B 1,100 40 1,364
C 440 10 341
3,410 100 3,410
Formula (Difference b/w actual qty at std mix and std qty at std mix) x Stand
B 1,364 40 1,422.96
C 341 10 355.74
3,410 100 3,557.40
Std. hours allowed for actual input (500 hours/ 110 input x 3,410 act. input)
Actual hours used for actual input
Difference
Standard Rate
Difference
Actual hours used
Std. hours allowed for actual Output (std. hours for actual Output)
(3,234 tons x 500 hours /100 tons)
Difference
1 Spending Variance
a) Actual amount of factory overhead
Fixed FOH
Variable FOH
Std. hours allowed for actual input (std. hours for actual input x Total std. FOH rate)
(3,410 tons x 500 hours / 110 tons x Rs 62.5)
Std. hours allowed for actual Output (std. hours for actual Output x Total std. FOH ra
(3,234 tons x 500 hours /100 tons x Rs. 62.5)
Actual QTY Material Price
Purchases Variance
s x Standard Rate
300 unfav
37.50
11,250 unfav
37.50
39.75
2.25 Unfav
15,800
35,550 Unfav
15,500
tual Output)
16,170
670 Fav
553,750
424,500 978,250
618,750
15,800
x Rs 25 395,000 1,013,750
Spending Variance 35,500 Fav
1,013,750
15,800
x Rs 62.50 987,500
Idle Capacity Variance 26,250 Unfav
andard hours)
15,500
x Rs 62.50 968,750 -
Efficiency Variance 18,750 Unfav
41,875 Fav
W-1: Actual cost of material
Proof:
Input 281,444
Less: 10% wastage (28,144)
Actual Production (output) 253,300
Direct material total variance = Difference between Standard and Actual Cost of materia
Formula (Difference b/w actual qty used and actual qty at std mix) x Standard price
743,600
572,000
371,800
1,687,400
Actual Cost of material
Material Price
Variance
81,900 Unfav.
112,125 Fav
13,650 Unfav.
16,575 Fav
x) x Standard price
Difference 16,000
Standard Rate 1.50
Formula: Difference between Standard and Actual rate x Actual quantity purchased
(2,100,310)
849,690
(651,000)
198,690
Unfav
per lbs
Unfav
13,760 / 8.16)
nce
114,000
181,500 295,500
114,000
165,000 279,000
16,500 Unfav
279,000
286,000
7,000 Fav