Problems on Standard Costing & Variance Analysis

Problem No. 01

Moyna Ltd. applies Standard Costing & their records contain the following information:

Particulars Standard Actual

Material Cost (Tk.) 60,000 55,000

Labor Cost (Tk.) 40,000 43,000

Overhead Cost (Tk.) 50,000 57,000

Sales (Tk.) 2,00,000 2,10,000

Production (Units) 10,000 10,000

There were no work-in-progress and completed goods unsold.

Required:

a) Calculate Standard Cost and Actual Cost per unit.

b) Prepare a Variance Analysis Report.

Solution:

Required: a)

Moyna Ltd.
Statement of Cost

Particulars Standard Cost Actual Cost

Taka Taka
1. Production in Units 10,000 10,000
2. Cost of Production:
Material Cost 60,000 55,000
Labor Cost 40,000 43,000
Overhead Cost 50,000 57,000
Total Cost 1,50,000 1,55,000
3. Cost per Unit (2 ÷ 1) 15.00 15.50

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Required: b)

Moyna Ltd.
Variance Analysis Report

Particulars Standard Actual Variances

Taka Taka Favorabl Adverse
e
1. Sales 2,00,000 2,10,000 10,000 Nil
2. Cost of Production:
Material Cost 60,000 55,000 5,000 Nil
Labor Cost 40,000 43,000 Nil 3,000
Overhead Cost 50,000 57,000 Nil 7,000
Total Cost 1,50,000 1,55,000 Nil 5,000
3. Profit (1 – 2) 50,000 55,000 5,000 Nil

Problem No. 02 (Home Task)

You are given the following information relating to Doyel Ltd. :

Standard Data:

Material Cost Tk. 40,000 ; Labor Cost Tk. ? ; Overhead Cost Tk. 30,000 ; Sales Tk. 1,25,000.

Actual Data:

Material Cost Tk. ? ; Labor Cost Tk. 35,000 ; Overhead Cost Tk. ? ; Sales Tk. 1,40,000.

Variance Data:

Material Cost Variance Tk.10,000 (Adverse) ; Labor Cost Variance Tk.5,000 (Favorable) ;
Overhead Cost Variance Tk.5,000 (Adverse) .

Standard and Actual Output in units 5,000 units.

Required: Prepare a Cost Statement showing standard and actual cost per unit and also prepare a
Variance Analysis Report.

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Problem No. 03

Standard cost data to produce 10 units of a product:

Material 50 units @ Tk.10 per unit

Labor 10 hours @ Tk.20 per hour

Variable Overhead Tk.5

Actual cost data to produce 800 units of that product:

Material 4200 units @ Tk.9.50 per unit

Labor 750 hours @ Tk.22.00 per hour

Variable Overhead Tk.500

Standard Fixed Overhead Tk.4,000 and Actual Fixed Overhead Tk.3,800

Standard Selling Price Tk.50 and Actual Selling Price Tk.55.

Required: Calculate necessary Variances and prepare a Variance Analysis Report.

Problem No. 04

The following information has been taken from the records of Titir Ltd. for a particular period:

Budgeted Sales:

Product A : 10,000 units @ Tk.10.00 per unit

Product B : 15,000 units @ Tk.12.50 per unit

Actual Sales:

Product A : 12,000 units @ Tk.9.50 per unit

Product B : 14,000 units @ Tk.13.00 per unit

Required: Calculate necessary Variances relating to Sales using Normal Method.

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