0S.

Stan dard Casting and Uarian ce Analysis

Cos Varia no
nce

Cost varlance S the differenco between a standard

co$ and the comparable acHual coS+ incurred
during aperiid

SHandard coSt

Cost 1S a target CoSt h i c h should be

Stan dard
attain ed.

Actual Cost

T h a t means h a t the real coSt SPend For pro duction

Servi Ce aCEtoit.

IS Consider d as coni rol +echoiques

*Variance n a 19SiS
re late to performan ce
vartan Ce ana ly SiS bas tcally
d ev i a t t o n

Variance
Cavouble and ODFavorable

S lesS than standard cos t

w h e r e the ac tua l coSt
Credit UariGnce
koown as Favorable

Standard CoSt
is more +han
actual Cost
*where the
un faVO ra ble, adoerse or
re ffered t ass
the difference iS

UariaOce
debtt

inno
 Controllable and unconirollabl0 Var(ance

Te o Variane CcaD b ATaced w4 re-pon, ibiit

Particular Segment per s o n i E call ed as (ontt1ia b
Eg E xcess us age OF na terl al 1s usuallythe
oF the Foreman concerned.
epali
+Tf a
variance ar Ses due to CerLain fators be
control OF man aqement, t iS k nop as
unt ont rollabic
varian ce

E Change ln the market materlal prlce of

Gene ral increase in labour rate
Tncrease in the rates of Power

Total Cost vrlance

*This means the di Ference between the to tal Standurd

COS+alues eAd of the out put achieved in perlod and t
total actua COS+ incurted,

Total CoS+

p Direct pa Direct 03 Over haad Sales

4
ma4erial lab our
CoS4 Vartance varlan2
CoSt Variance
CoStUariance
o1 MATERIAL COST VARTANCE
This IS the diEfere nco be tweeo he stan
dard Co St
rec ma-ieriaS 9peci Eied for the out
put achieved
he actaal coSt OF dioc material used.

Materia
S4andard x
standerd Ac ual x kctuo
CoS+ varldhce
Price prfce

Materia Cos+ arlan ce

Material Price Materia USege

Variance Va riance
MV Csp - Ap )x AQ CMuvz s0-Aa) xSP

Ma terial Material
Mix variance revice us«ge

Variance or

Material
iet d Varlance

innoi
 ate

Material Price Vani ance

Maierial Standard Actua xActual Qly

frice Variance rice Price

.Reasons For MaHe rial Pricce V oAriance

oCha ngs Ip prices of materiale
Faflure to purc haSethe S4and ard Quant tymaterial
03 Chang e in
quali ty 6 material
TneFFtcient Purchage
aS Change in delly r co S+.

OMaterili Hi
Material Usage Vari ance
. Materra) Yiel&
vartae
Material Standard-Actual X Siandard
Usage variaDce
Price

Reasons for a+erial Usag tariance

OUse of defectt ve materials
o Ca re\ecSness in the use o Mat e rial
93 DeFec in part of machi nery
4
Changes in the quali t OF material
OS Use oF Subs44ae
materials.

innoie
 Note
anie-OS
al, Materlal Mi
Min Varianca
PProduc4 uni ts-o Mele
uni k02 M
Uartance
cdifFerence
This sAs diff
betoeen the
f mc4eriais
standard Mím or
porp orti00
proporin oF ma4eria ls,
Material Revised Standard Ackual
Mi variance X tandard
Price

Revised Standard 2S+andard t For each

X ota
material
actual
Total Standard

01. Ma Ferial Vield Variance

#While the Other VariaDce are CalCulate d on the

Scalculated ce
Material yeild variance
bass oG input
on the basis o outpu
represen ts that portion oF total usage

coh ich is due the differences b Qen

yauri ance to

the S t a n d ard output +he ac Faal out p ut.

Standard Cost x Standard- Actual

Matertal Vteld
Per unit Yield yield
Variance
 Varian
Varjancce
e

Vield
yield
For Material
Reasons
O p e r a + o n .

oC
me
thods
materia purChase
DeFective

o1 oF materia
S4andard 9uan ti ty
Sub
o2 care
in handling
of due
o3 Lact
P r o p e r S u p e r v i s i o o n

Lack ooF

Material revised uSage variCin Ce

to tal s t a ndard
reFers to the
Stan dard u a n ti ty Standar
OutPutdt
materialg For ac tua
Guanti t oF

P ropor+i0n.

revised StaNdard u a n ti ty greater than

he
varidnce would be fermed aS
the
Siandard quanti
vise Versa.
advere and

Standard -Pevised
Material revised Standard X
Sage variance Price Standard Qt

Examp le 9

SHandardd Ro te Actual Rate

109k S
1 o kg A 1S

.Matevia sP) A - AP)

Cos Uar iance
(o0 x S) -(120 a 4 7S)
z
7O CA)

&Dfavorab le var ian ce

 ).1le.

M a t e r i a

Price Va rianc
(SPAR)x AQ
(S-4+S) 120
O 2S 20
3 CE)

Ma t e r i a l

(S-A0) SP
yario DCe COD 120) X S
Usag
100 (A

check
Materia CoS+ MPV+ MUV
Vario Nce 30CF) + 00 CA)

7oCA)

02
rample
ice
Sandard
300okg at RS 3 Per kg.
Ma tertal purchaSe
uniE OF Finishe d
ofmaterta)
Eted Or One
q-uan t it
2 per k .
Product s g
Materîal
Ni
opening Stock o

materiai S00 kgs

Closi ng Stock period 8o units,

output durl ng the

Actual
000
8Ox3S
SHandard t
For ac tual ouput

O pening9 O
Actua ConSumptio z 300o kg
PurchaSe

closi ng Csoo) k
n
 .

Aak h,
Material price (SPAP)x
VariaNCe
2500
2
( C- 3
SooCP)

Material usage Cs Ao) - x SP

( i o 0 o -s o 0 ) X

o00 (

Material oS+ (g Sp) 0 x AP)

artdN Ce

C2090 xa) - soo3)

4 000
3 Soo CA)

Material cost MPV MUV

yarianDce SoCA) iOoo CA)
3 SooCA)
 a mple 03

Mate rial S+andard DY Standard rice Actual 0t tul

Cks)
Ck9) Prie
10d
32S
4 4SD
60
6 O0

40 40

(S x s )
MC - ( A x P)
100 x 3 Ci20x 3.2 s)2 9o CA)

8ox 4) C0x 4 So) sC)

(60 x s) Csox6)
Total 85(A))

MPV
(SP AP xA

X 0 3o CA
(3 3.2S) .

3s CA)
x 0
4 -4-So)
So CA)
S 6)
S CA
Toal-
 SP
MUV (s AO

33 2 Go CA)
(100 12 0)

X4 40 CE
(8o 70)
60 so) S
so CE)
To +al 30 CE)

checc

MCV MPV + MOV

z SCA + 30 CF)
8S CA

Materia Mi 2 SP C RS AQ)
tartan te
3 X
i00- 20 a 60 C )

2
A (80 40 Ce

S x (60 Sso) aso CF)

Tote 30(E)

Actual 94 1S mO re +han revise Standard f1

4he yarian ce ts adyersSe & vfse VersaR
woCin

Foreach meria)xTo4« A9

2
LOO 0 O

4 3
2 X 2

60
2

4otal A use iS the same he tota l 90

A
e s4a blish +here S no m a t r i al cevis e usa ge

variance. ASothe number of uni4s of output ts

iS not hense +here Is no ield Uarid D ce

inno
 3 tandard oSt
and
CA materi
al
s H a n d a r d

+he
fhe oroduCt)ona OF
produCtion.

The FOT
FOr
requlred
m a t e r i a l aS F9 lows.
oF S
of pro
duct A
M a e r îal

tce RS S per ikg

Staodard
pr t
reella
a t ed matertal data
and
ProducAlon

The a t tual

as Folo w s
400 n i ts OF Produe

Material used 2 00 K9
l9
Ps4 8 o per
Price oF ma te r i a i

Calcalate,
vari ance
Ma terial prèCe
Material uS age vai a0 ce

Material Cost VariaNCe

Standard A ctual
Price 480

00 200
 Datc
MA M SeS s
Y DL Semní
Sand Acua|

MCY SC AC
SX2oo o) 4&
oo

S60CA)

M UD SP Csd AO)
s C2 o0o 2 2 0o)

o00 (A)

A C sp AP)
2 00 S - 4 80)
44OC FS

Checle

MCV PU MUU
+ 000 LA)
S6olA) z 4 4 of)
S6oCA 560 (A)

SeholATE
 N

Eample o4

the followiog
10formation Calcu la t e the
Fro
material csE varian ce.

Ac tua l Actual
Maferial Standard Standard
Oty Cr Price Ce Prtce (
60 20 20
31
40
03

MPU SP P A
20 20 X 7 O
0 )x 3 31 CA)
31A

MUV 2 A0) sP
C60 42) X 20 40 CA
40 31 2

I5o CA)

MCV ( S r SP) CAQxAP)

( 6 0 20) 71 r 20) 24oh)
2 (40 r to) 31 ) 51E)
18/CA

chec
MCV MPV MUV

3 CA) IsoA)

SchoolMATE
 Male ria M
Varia0 Ce
ce SQ- AQ)
61 & ) xXSP
2 20
204 A)
4.2 31) 10 2C
02CA)

Worina oQ,

0 X 103
61. 8
LOO

0 40 LO 3
41 2

Materia revised usage variance z ( s RsQ) x SP

() 6 0 - 61.8) X20 36 (A)
4 0 - 41.2)x 1012 CA)
48A

MUV MAV t MPUV

102A)+ 48 CA)
2 I5o (A)

MMV t MRUV
N MPV
2
31A 102CA)+As CA)
181CA)