STANDARD COSTING

Case 1

From the data given below calculate Material Variance:

Actual output was 500 units.
Actual material consumption and actual costs are as under-

Particulars Standard Qty Standard Price

Material X 2kg Rs. 3 per kg
Material Y 4kg Rs.2 per kg

Particulars Actual Qty Actual Price

Material X 1100 Kg Rs.3410
Material Y 1800 Kg. Rs.3960
Case 1 Solution:

PARTICULARS STANDARD ACTUAL

QTY PRICE TOTAL QTY PRICE TOTAL

MATERIAL X
MATERIAL Y

PRICE VARIANCE Quantum Nature USAGE VARAINCE Quantum Nature

AQ*(SP-AP) SP*(AQ-SQ)
Material X Material X
Material Y Material Y

COST VARIANCE Quantum Nature

(SP*SQ)-(AQ*AP)
MATERIAL X
MATERIAL Y
Case 1 Solution:

PARTICULARS STANDARD ACTUAL

QTY PRICE TOTAL QTY PRICE TOTAL

MATERIAL X 1000.00 3.00 3000.00 1100.00 3.10 3410.00

MATERIAL Y 2000.00 2.00 4000.00 1800.00 2.20 3960.00
3000.00 7000.00 2900.00 7370.00

PRICE VARIANCE Quantum Nature USAGE VARAINCE Quantum Nature

AQ*(SP-AP) SP*(AQ-SQ)
Material X -110 A Material X 300 A
Material Y -360 A Material Y -400 F
-470 A -100 F

COST VARIANCE Quantum Nature

(SP*SQ)-(AQ*AP)
MATERIAL X -410 A
MATERIAL Y 40 F
-370 A
Computation of Sales Variances
Compute the sales turnover variances from the following figures:

Product Budgeted Actual

Quantity Price Quantity Price
(Rs.) (Rs.)

A 2000 2.5 2400 3.00

B 1500 5.00 1400 4.50
C 1000 7.50 1200 7.00
D 500 10.00 400 10.50
BASIC CALCULATION

Product Budgeted Actual Budgeted Actual Budgeted Actual Actual

Price Price Quantity Quantity Sales Quantity Sales
at
Budgeted
Price

a b c d e = a*c f= a*d g = b*d

D
Sales Variances
Sales price variance Actual quantity (Actual price – budgeted price)

= Actual sales – Standard sales

Sales volume variance Budgeted price (Actual quantity – Budgeted quantity)

Standard sales – Budgeted sales

Total variance Actual sales – Budgeted sales

=
Average budgeted price per unit of budgeted mix
=

Average budgeted price per unit of actual mix

=

Sales mix variance = Actual total quantity (Budgeted price per unit of actual mix –
Budgeted price per unit of budgeted mix)
=
=

Sales quantity variance = Budgeted price per unit of budgeted mix (Actual total
quantity - Budgeted total quantity)
=
=
BASIC CALCULATION

Product Budgeted Actual Budgeted Actual Budgeted Actual Actual

Price Price Quantity Quantity Sales Quantity Sales
at
Budgeted
Price

Rs. Rs. Rs. Rs. Rs.

a b c d e = a*c f= a*d g = b*d
A 2.50 3.00 2000 2400 5000 6000 7200
B 5.00 4.50 1500 1400 7500 7000 6300
C 7.50 7.00 1000 1200 7500 9000 8400
D 10.00 10.50 500 400 5000 4000 4200
5000 5400 25000 26000 26100
Sales Variances

Sales price variance Actual quantity (Actual price – budgeted price)

= Actual sales – Standard sales
= 26100 – 26000 = 100 (F)
Sales volume variance Budgeted price (Actual quantity – Budgeted quantity)

Standard sales – Budgeted sales

26000 – 25000 = 1000 (F)
Total variance Actual sales – Budgeted sales
26100 – 25000 = 1100 (F)
Average budgeted price per unit of budgeted mix
= Rs.25000 / 5000 units = Rs. 5.00

Average budgeted price per unit of actual mix

= Rs.26000 / 5400 units = Rs. 4.81

Sales mix variance = Actual total quantity (Budgeted price per unit of actual mix –
Budgeted price per unit of budgeted mix)
= 5400 (4.81 – 5.00)
= Rs. 1000 (A)

Sales quantity variance = Budgeted price per unit of budgeted mix (Actual total quantity -
Budgeted total quantity)
= 5 (5400 – 5000)
= Rs. 2000 (F)