commerce-2 is presenting Direct Mi production volume an 8x! st ~ Actual Cost The aterence between the Standard Dect Mae Cost o he acta ‘Aclval Cos of Dec Materia) ‘Direct Material Price Variance (Standard Cost of Actual Quantity ~ Actual Cosi} (The dinero between tho Standard Price and Acual Price forthe Actual Quant AP) « AQ} Or (SP * AQ) —(AP « AQ)] Direct Material Usage Variance [Standard Cost of Standard. Quantity for ‘cual Producion ~ Standard Cost of al Quanity} (The aterence between the Standard Quantity ‘speed for acul production and tbe ACB! ‘Quant use, t Sandard Pcs Price (80 Aa) « $F] or (SQ SP) (Aa « SPH}Une ben a) Pa eee ad Direct Material Vield Variance Standard Cost of Actual Quantity in| [Standard Cost of Standard Quantity iandard Proportion ~ Standard Cost of | Actual Production - Standard Cost of al Quantity Actual Quantity in } The diference between the Aci Quant in| (The dference betreen the Siandard Quanity ‘standard proporton and Actual Quantiy in Direct Material Mix Variance setual proportion, at Standart Purchase Price) | Quanity in standard Purchase Price) {(RAQ= Aa) x SPI; -R /RAQ x SP) — (AQ SP) (SQ x SP) - (RAQ * SPI] ‘Alterative Formula sal Actual Quantity tandard Price per unit of Standard Nix ss Average Standard Price per unit of al Ma ‘Alternative Formula (units) x (Average | [Average Standard Price per Standard Mix * {Total Standard Quantity units) Less Total Actual Quantity (units) unit of CoCr cea) ee Cag CCM ery ome ae i a} <Cen a Cee €__ bky-etky-pap > row} a een e Car ee Cag CCM ery Gees: i a} <Bene a TELL €__ bky-etky-pap > row} SS (AQ-RSQ)xSP een e . A ae ee Cag Srcera a TELL €__ bky-etky-pap > row} SS Click to add title 1111.11)x5: een e d a a co) coi CoC ene °@ roeed Ela Pou acta My Direct Labour Mix Variance Or Gang Variance [Standard Cost of Actual Time Worked in Standard Proportion ~ Standard C Actual Tine Worked} (The diference between the Actual Ho rd proportion and Acual rked in actual proportion, at Standard [(RAH(- AHP [IRAH » si SR) SR) — (AHF x SR) CoCr cea) ty il} coi = Q ceria! So Direct Labour Vield Variance Or Sub-Efficiency Variance [Standard Cost of Standard Time Actual Production - Standard Time Worked in ost of Actual Standard ween the Standard Hour 5 produaton and. ACL Hours worked in standard at anard Ra) SH ~ RAH) « SR SH SR)— (RAH Cc COC merseee Ta Ein © eta DD) [IGP * AQ) - (BP «8Q)) [gP » (40-80) Sales Quantity Variance (Revised Standard Sales) (Budgeted Sales) {BP « RAQ) (BP «BC or or [BP * (AQ RAQ)L [BP « RAQ- BOY ‘Altemative Formula ‘Alternative Formula | Actual Quanity (units) x {Average | [Average Budgeted Price per unit of Budgeted Price per unit of Acual Mx Less | Budgeted Mo » {Total Actual Quantty Average Budgeted Price per uni of | (units) Less Total Budgeted Qty (units) een e CJ = @ i) (e Son coi mean ome ae il} a} <[eA [BP (AO RaQ) Alternative Forma [Moa Actual Quay (urs) = Budgeted Price por unt of Actua i Le Averoge Busted Price per ul Budgets Mi = (8 » FAQ) eC ao) Coooig Sales Guanity Variance anc (Budgies s ( «RAQ)- (BBO) [BP (AQ — Bay) Alterative Forma FC uan tonyeC an ‘Sales Margin Variance [AO «A — (60x Bm) ‘Sales Margin Pris Variance (Atal Mara [aM AQ)=| [2s (AM — Buy Sales Margin Mix Variance Standard Margi) Coooig ‘Sales Margin Volume Variance Standard Nagin) (udgeted Margin) (BM » AC) = (BM * BOP fy ‘Sales Margin Guantly Variance Revived Sandard Maron Budgeted Magi) ay FC uan tonyPou acta My CoCr cea) D) Dee ree Caen Foy S all 53% Py aaren i PREY €__ bky-etky-pap > row} Reporting of Variances AcontaconSeemere (Arron Covina) een e | Son Dee Conc ome ae il} a} <Eran fa €__ bky-etky-pap » Ss 9 -onciliation of variances orting of profit Investigations een e Son Dee ane i a} < ee Cae esple of management by exception (MEE) based on standard budgeted and act with vartances ae ctl dita and we my have to computa the budgeted profit ie the budgeted prof with the acta! one. Th Maer yield valance (6) Labor rate varie (0) Labor ile ume vara Libor efclency varance Cee LT] D pe H aC oC H SCL mn ley i a} <(). Material mix variance (@)__ Material yield variance Tabor cost variance (@) Labor rate varlan (6) Labor idle time varian (@) Labor effcieney variance (Labor mix variance (@)__Labor sub-mix efficiency variance Variable overhead cort variance {@) Variable overhead expenditure variance (b) Variable overhead effcieney variance Fixed overhead cost variance (@) Fixed overhead expenditure varance (b) Fixed overhead volume variance (0) Fixed overhead eapaciy variance (i) Fixed overhead effcioncy variance margin variance (in terms of pr (@) Sales margin price variane (b) Sales margin eC D pe H aC oC i aL Uae ol Rela tacd i a} <7 eub-mix efcieney variance head core variance read expenditure variance (6) Variable overhead efcie Fixed overhead cost variance (@) Fixed overhead expendizure variance Fixed overhesd capacity variane Fixed overhead efciency variance “Sales margin variance (in terms of profit) {@) Sales margin price variance (b) Sales ms ime variance 0 margin mix varia Xxx (@)__ Sales margin quantity varance XxX tial profit eC Ly an Dery PCa ror i a} <6 20 Problem 3: Particulars ‘Budget —[—~Aetuad Variances ‘Sales! production (oni) 7200000 | 165000 (35000) ‘Saler (Re) aroma | Teraae @o7T00 ess Variable oat (RE) 1266000 19TB50 115000) (230250), Prepare a reconcilation of budgeted profit to acwal profie using absorption costing approad Tass Fired oat) T5000 Prone i900 | Solution Workings ‘© Standard margin: Rs. $19000 ‘Average sandard margin unit = Rs. 519000/ 200000 units = Rs. 2.595 ‘Actual sales price! uni: Rs. 1692900/ 165000 units = Rs, 10.26 Standard variable cost unit: Rs, 1266000/ 200000 units Standard cost unit: (Rs. 1266000 + Rs. 315000) Actual cost unit: (Re = a oC) =| iar Cees ces) D) Tr = ao) De Oe CR ene i a} <Parcieulars Budget Actual Variances ‘Sales production oni) 200000 165000 ‘Sales (Re) 14692900 (407100), oss Variable ont (RE) 191850 Tess Fred cone) Prepare a reconciliation of budge approach, rd margin: Rs. 519000 erage standard margin! unit = Rs. 519000/ 200000 units = Rs. 2.595 unl sales price/-uni: Rs, 1692900/ 165000 unies = Rs. 10.26 Standard variable cost/ unit: Rs, 1266000/ 200000 units = Rs, 6.33 Standard cost une (Rs. 1266000 + Rs. 315000)/ 200000 units = Rs. 7.905 unit: (Re. 1074150 + Rs. 330000)/ 165000 units = Rs. 8.51 sual margin! unit = Rs, 10.26 - Rs. 7.905 = Re. 2355 Cee LT] = ao) De Oe CR ene i a} <+ Actual margin! unit = Rs, 10.26 - Rs. 7.905 = Re. 2.355 + Actual variable cote! unit: Re, 1074150) 165000 unis ‘+ Standard fixed cost/ unit: Rs, 315000/ 200000 units = Rs 1D Sales margin variances (3) Sales margin pri /AM/unit - SMlune) x AQ = [(Re. 2597 — Rs. 2.387)] x 165000 units = Rs. $M x (AQ ~ BQ) = Rs, 2.597 x (165000 ~ 20000 ariable overhead vari (a) Variable cost varane variable cott unit x AQ ~ actual variable overhead = Re, 6.33 x 165000 Re. 1074150 = Rs. 29700 (A) 3. Fixed overt (@) Fixed overhead expenditure varances: budgeted 315000 ~ Rs. 330000 = Rs. 15000 (A) (b) Fixed overhead volume variance: absorbed overhead ~ budgeted overhead Cee LT] Ly ad SCC Ds i a} <od expenditure varances: budgeted overhead ~ actual overhead Rs. 330000 = Rs. 15000 (A) Budgeted Prof (Budgeted quantity x standard 519000 margin) Var ead cost variance (A) (29700) Fixed overhead expenditure variance (A) Fixed overhead volume variance (A) Fixed overhead cost variance (A) eC D pe H aC oC i aL Uae or Related i a} <‘Sales marin volur (90825) Sales margin price variane Sak TOS] 288750 of variances point out the ex ehavioral, motivat Cees ces) Ly io ce ace) Rees i a} <Cees ces) ie ey — Ld a Tig H Sa uedCees ces) ie ey — Ld a Tig H OS Ea Ua Eeecommerce-2ispresertng r") r) r Ec \f £ 4 | n u> Ls You Ranajit CerCees ces) ir: Ly a) PO e I) Dad i a} <Cee LT] ie ey — Ld a Tig H OS Ea Ua Eee i a} <