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what causes each of the variances? 4. State in your report one reason that might be the cause of each variance you compute and state
what causes each of the variances? 4. State in your report one reason that might be the cause of each variance you compute and state one action that could be taken in the future to correct or improve that variance in the future. Material Variances :- SP (Standard Price ) = Budjet material / Budjeted quantity = 180000/20000 = 9 AP (Actual Price ) = Actual Material / Actual Quantity = 163500 / 18000 = 9.083333 Material Price Variance (MPV) = ( Standard Price - Actual Price ) X Actual Quantity =( 9 -9.0833 ) X 18000 = 1,500 (A) Material Usage Variance (MUV) = ( Standard Quantity - Actual Quantity ) X Standard Price (20000 - 18000 ) X 9 - 18000 (F) Labour Variances :- SR (Standard Rate Per Unit) (Standard rate per hour Not avialable in data) Budjed Labour cost | Budjeted Units = 360000/20000 = 18 AR (Actual Rate per Unit) (ACtual Working Hours Not availble in data) Actual labour cost / Actual qunatity = 342000/ 18000 = 19 Labour Rate variance (LRV) = ( SR-AR) X Actual Hours / Actual quanity = ( 18 - 19X 18000 = 18000 (A) Labor Efficiency Variance (LEV) = ( SH - AH) X SR or (SQ-AQ) X SR = (20000 - 18000 ) X 18 = 36000( F) Production Volume variance for Fixed cost overheads :- Actual Output X Standard Price - Budjeted fixed Overheads 18000 X 9 - 1,76,000 = 1,66,000 - 1,76,000 = 10000 (A) Spending Variance for Fixed cost Overheads :- Budjeted fixed Overheads - Actual fixed overheads = 1,76,000 -1,82 700 = 6,700 (A) Flexible Budjet variable overhead variance : Actual Output X standard Rate - Actual Overheads
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