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Latest and on Calculate all the Material and Vannes Variate Over Expendite my Vad Expenditure and Volume Variances and Sales Price and Sales Volume Vrees Solution 1. comitation of Flatent Units Materiat A and Particulare Me 9,000 100 100% Going wir 000 100% som Total 9,900 > Computation of Sales Variances Col. (1) GBP Col (2) ABP 12,000 units 900,00,000 9,900 Co. (3) AGAP 9,000 units 1 NP . Price Variance 4,00,000 4,57,500 15 Volume Variance = 6,00,000 - 4,50,000 1,50,000 A Total sales Variance = 6,00,000 AS701,12,500A 60,000 -10 Notel Budgeted NP Ratio 6,00,000 Effect of Sales Volume Variance on Profit SW w Budgeted NP Ratio - 1,50,000 X 10% = 15,000 3. Computation of Materials Variances (a) Basic Computations 24,000 kgs -2 kopu, B- Standard Material Consumption: A - 12,000 units Total AQ Consumed - 22,275 10,890 -- 33,165 kg. This is apportioned between A and B in 2:1 ratio, for com of RAQ. Hence RAQ for A and B are 22,110 kg and 11,055 kg respectively, (1) Material Variances Computation Chart Particulars Col. (1): SQ X SP Col. (2): RAQ X SP Col. (3): AQ X SP Material A (9,900 units x 2)x? 3 22,110 kg *?3 22,275 kg 73 859,400 - 66,330 - 766,825 Material B (9,900 units x1)x14 11,055 kg x 34 10,890 kg x 14 = 39,600 244,220 343,560 Total 199,000 71,10,550 71,10,385 12,000 ks 12,000 units 1 kg pu . Col. (4): AD ** 2,21W 10,890 kg * {M 31,07,019 (given + Material Yield Variance **99,000 - 1,10,550-11,550A Material Mix Variance 1,10,550 1,10,385 165F + Material Price Varance 1,10,385 1,07,019-23,47 Material Usage Variance 99,000 1,10,385 = 11,385A + Material Price Variance b/d as above23, Total Material Cost Variance 99,000 - 1,07,019 = 78,019 A Col. (1): SH X SR (9,450 x 5) 24 = ? 1,89,000 4. Computation of Labour Variances Col. (2): Net AH X SR Col. (3): Total AH X SR (48,000 - 300) hrsx 4 48,000 hrs x4 - 1,90,800 +71,92,000 Col.(4): Total AHA 48,000 hrs 3.98 31,91,250 + Labour Net Efficiency Variance = 1,89,000 1,90,800 = 1,800 A Labour Idle Time Variance ={ 1,90,800 - 1,92,000 ={ 1,200 A + Labour Expenditure Variance = 1,92,000 - 1,91,250 = 2 7507 + Labour Gross Efficiency Variance = 1,89,000 - 1,92,000 = 3,000 A Labour Expenditure Variance b/d as above = 750 F Total Labour Cost Variance = 1,89,000 - 1,91,250 = 2,250 A 16.39 - per Machine Hour * 10 per Labour Hour 2. Rate Computa 1.10,000 5,500 units x 20 (a) BROH 30 SR SR per unit 20 (1) ROH SR per Machine hour No. of Machine Hours 4 Hours SR per unit 20 (c) FON SR per Labour hour No. of Labour Hours 2 Hours Col.(3):BFOH COL (4) Aron 31,10,000 Labour hrs 10,800 hrs x 10 = + 1,08,000 3. Computation of FOH Variances Col.(2): AH X SR Machine hrs 22,000 hrs x 5 = 1,10,000 FOH Expenditur Col.(1): AO X SR 5,450 uts x 20 1,09,000 FOH Capacity Variance - Based on Machine Hours Varence = Nil =1,000 Labour Hours = 2,000 A R1,09,000 -1,10,000 1,09,000 - 1,08,000 + 1,10,000 -1,10,000 1,08,000-71,10,000 + = 1.10,000-115 + FOH Expenditure Variance bfd as above = 15867 FOH Efficiency Variance-Based on Machine Hours Labour Hours = 1,000 F =1,000 A FOH Volume Variance = 1,09,000 -1,10,000 = 1,000 A Total FOH Cost Variance = 1,09,000 - 1,09,000 = Nil 4. Benefits of using multiple activity bases for VOH absorption are - these two variables. (c) Cost reduction activities within this area are more likely to be successful. (a) Product Costs may be obtained on a realistic basis, resulting in improved pricing and decision-making in general (b) There is a better analysis of the link between Activity and Cost Behaviour, and aid to focus on the relationships (d) Since it becomes apparent that costs are not driven solely by output volumes, the focus on managenal attest greatly broadened. This encourages Managers to adopt a 'wholistic view of the organisation. 16. Cost Variances Computation - Equi Prodn WIP Valuation - FIFO and WAC Methods A Company manufacturing two products A and B uses a standard costing system. The following data relating to October RTP, 198, NS 24 A 2 8 16 326 4.000 8.000 16,000 2M been furnished to you - Particulars of Standard Cost per unit Direct Materials Direct Wages Fixed Overheads Total Units processed / in process Beginning of the month - All Materials applied and 50% complete for Labour and OH End of the month - All Materials applied and 80% complete for Labour and OH Units completed and transferred to warehouse during the month The following were the actual costs recorded during the month - Direct Materials purchased at Standard Price amount to 2,00,000 and the Actual Cost of which is 82,20,000. Direct Materials used for consumption at Standard Price amount to 1,75,000. Direct Wages for Actual Hours worked at Standard Rates were 4,20,000 and at actual wage rates were ? 4,12.000 Fixed Overheads budgeted were 8,25,000 and the actual Fixed Overheads incurred were ? 8,50,000. You are required to calculate the following for the month of October - 1. Direct Materials Price Variance at the point of consumption and at the point of purchase. 2. Direct Materials Usage Variance. 3. Direct Wages Rate and Efficiency Variances. 4. Fixed Overheads Volume and Expenditure Variances. 5. Standard Cost of Work in Process at the end of the month. . . 16.35