CHAPTER 20

Exercise 20 33 Materials And Labor Variances

Direct Materials (5lbs @ $4,00) $ 20,00
Direct Labor (2hrs @ $ 11,25) $ 22,50
Standart Prime Cost $ 42,50
the actualy results for next year are as follows.
Units Produced 175.000
Materials Purchase 930.000 pounds
Materials Used 925.000 pounds
Direct Labor 362.500 hours @ $ 11,15
1. Compute Price and Usage variances for materials
Price Variances for materials :
MPV = ( AP SP ) AQ
= ( $ 4,10 - $ 4,0 ) 925.000
= 0,1 x 925.000 = $ 92.500
Usage Variances for materials :
MUV = ( AQ SQ ) SP
= ( 925.000 875.000 ) $ 4
= $ 200.000
*) SQ = 5 LBS X 175.000 = 875.000

2. Compute the labor rate and labor efficiency variances

The labor rate variances :
LRV = ( AR SR ) AH
= ( $ 11,15 - $ 11,25 ) 362.500
= $ 0,1 x 362.500 = $ 36.250
The labor efficiency variances :
LEV = ( AH SH ) SR
= ( 362.500 350.000 ) 11,25 = $ 140.625
*) SH = 175.000 x 2 = 350.000
Exercise 20 35 Materials and Labor Variances
Direct materials (2,5 lbs @ 0,90 ) $ 2,25
Direct labor ( 0,75 @ $ 7,00 ) $ 5,25
Standart Prime Cost $ 7,50
During the year 53.000 pounds of material were purchase and used for the changcover
activity . there were 20.00 batched produced
Direct material $ 42.000
Direct labor $ 102.000 ( for 14.900 hours)
1. Materials Variances
Price Variances for materials :
MPV = ( AP SP ) AQ
= ( 0,8 0,9 ) 53.000
= 0,1 x 53.000 = $ 5.300
*) AP = 42.000 / 53.000 = 0,8
Usage Variances for materials :
MUV = ( AQ SQ ) SP
= ( 53.000 50.000 ) 0,9
= $ 2.700
*) SQ = 2,5 x 20.000 = 50.000

2. Labor Variances
The labor rate variances :
LRV = ( AR SR ) AH
= ( 6,85 7,0 ) 14.900
= 0,15 x 14.900 = $ 2.238
*) AR = 102.000 / 14.900 = 6,85
The labor efficiency variances :
LEV = ( AH SH ) SR
= ( 14.900 15.00 ) 7,0
= $ 7.000
*) SH = 0,75 x 20.000 = 15.000

So,

Problem 20 46 Standard Costing , Planned Variances

1. Material price and usage variances
Price Variances for materials :
MPV = ( AP SP ) AQ
= ( 1,05 - 1 ) 19.500
= 0,05 x 19.500
= $ 975
Usage Variances for materials :
MUV = ( AQ SQ ) SP
= ( 19.500 20.000 ) 1
= $ 500
*) SQ = 0,5 x 40.000 = 20.000

2. Labor Rate and Efficiency Variances

The labor rate variances :
LRV = ( AR SR ) AH
= ( 10,24 - 10 ) 4.100
= 0,24 x 4.100 = $ 984
*) AR = 42.000 / 4100 = 10,24
The labor efficiency variances :
 LEV = ( AH SH ) SR
= ( 4100 - 4000 ) 10
= $ 1000
*) SH = 40.000 x 0,1 = 4000

3. If actual labor hours is 3900 , Actual labor cost 39000

The labor rate variances :

LRV = ( AR SR ) AH
= ( 10 - 10 ) 3.900
= 0 x 3900 = $ 0
*) AR = 39.000 / 3900 = 10

The labor efficiency variances :

LEV = ( AH SH ) SR
= ( 3900 - 4000 ) 10
= $ 1000
*) SH = 40.000 x 0,1 = 4000

Terdapat perbandingan tarif varian antara the rate labor cariances antara 4100
jam dan 3900 jam , dimana pada LRV dengan 4100 jam terdapat rate sebesar $
984 sedangkan LRV dengan 3900 jam terdapat rate sebesar $ 0 sedangkan pada
LEV nya pada nilai yang sama dan tidak ada perubahan.

Problem 20 47 Standard Costing

Direct materials (5 lbs @ $ 0,8 ) $4
Direct labor (1,5 hours @ $ 16,00) $ 24
Standard prime cost $ 28
During december 52.000 pounds of materials were purchased and used in production. There
were 10.000 case produced with :
Direct materials $ 40.000
Direct labor 236.910 (for 14.900 hours)

1. Compute the materials variances

Price Variances for materials :
MPV = ( AP SP ) AQ
= ( 0,77 0,8 ) 52.000
= 0,03 x 52.000
= $ 1560
*) AP = 40.000 / 52.000 = 0,77
 Usage Variances for materials :
MUV = ( AQ SQ ) SP
= ( 52.000 50.000 ) 0,8
= 2000 x 0,8 = $ 1600
*) SQ = 5 x 10.000 = 50.000

2. Compute the labor variances

The labor rate variances :
LRV = ( AR SR ) AH
= ( 15,9 - 16 ) 14900
= 0,1 x 14.900 = $ 1490
*) AR = 236.910 / 14.900 = 15,9
The labor efficiency variances :
LEV = ( AH SH ) SR
= ( 14.900 15.000 ) 16
= 100 x 16 = $ 1600
*) SH = 10.000 x 1,5 = 15.000

3. What are rhe advantage and disadvantage that can results from the use of a
standard costing system ?