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    ssregens82
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    This document provides an example of calculating variances when actual amounts bought and used are unequal to the standard amounts. It shows that the total variance (V) equals the purchasing variance (PV) plus the usage variance (QV). An example is given where the actual amount bought is 1200 units at a price of $3.00 each, but the standard amount bought is 900 units at $2.80 each. The resulting PV is $240 favorable and the QV is $280 favorable, giving a total variance of $520 favorable.

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    cost accounting

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    This document provides an example of calculating variances when actual amounts bought and used are unequal to the standard amounts. It shows that the total variance (V) equals the purchasing variance (PV) plus the usage variance (QV). An example is given where the actual amount bought is 1200 units at a price of $3.00 each, but the standard amount bought is 900 units at $2.80 each. The resulting PV is $240 favorable and the QV is $280 favorable, giving a total variance of $520 favorable.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLS, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    2 views1 page

    Materials Buy and Use

    Uploaded by

    ssregens82
    This document provides an example of calculating variances when actual amounts bought and used are unequal to the standard amounts. It shows that the total variance (V) equals the purchasing variance (PV) plus the usage variance (QV). An example is given where the actual amount bought is 1200 units at a price of $3.00 each, but the standard amount bought is 900 units at $2.80 each. The resulting PV is $240 favorable and the QV is $280 favorable, giving a total variance of $520 favorable.

    Copyright:

    Attribution Non-Commercial (BY-NC)
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    AMIS 525

    Standard Costing: Materials Buy and Use Unequal Example

    VARIANCE ALGEBRA: V = AC - SC Definition

    V = [ AA * AR ] - [ SA * SR ]

    V = [ AAuse * AR ] - [ AAuse * SR ] + [ AAuse * SR ] - [ SA * SR ] V = [ AAbuy * AR ] - [ AAbuy * SR ] + [ AAuse * SR ] - [ SA * SR ] V = [ AAbuy * AR ] - [ AAbuy * SR ] + [ AAuse * SR ] - [ SA * SR ]

    RATE VARIANCE

    AMOUNT VARIANCE

    V = [ AAbuy * [AR - SR ]] + [[ AAuse - SA] * SR ]


    example: AA AA 1200 buy 900 use SA SR 800 $2.80

    AR

    $3.00

    QV = [ AAuse * SR ] - [ SA * SR ] QV = [900 * 2.8 ] - [ 800 * 2.8 ] QV = 2520 - 2240 QV = +280U PV = [ AAbuy * AR ] - [ AAbuy * SR ] PV = [1200 * 3 ] - [ 1200 * 2.8 ] PV = 3600 - 3360 PV = +240U AAbuy = AAuse + AAunused PVuse = [ AAuse * AR ] - [ AAuse * SR ] PV = [900 * 3 ] - [ 900 * 2.8 ] PV = 2700 - 2520 PV = +180U PVunused = [ AAunused * AR ] - [ AAunused * SR ] PV = [300 * 3 ] - [ 300 * 2.8 ] PV = 900 - 840 PV = +60U
    1/9/2014

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