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Material Variance: Unit 2 Standard Costing (MA-06101355)

The document provides information to calculate material variances for a manufacturing process. It gives the standard and actual quantities and costs of materials A, B, and C used to produce 10 units. There is a material cost variance of Rs. -2,225, a material price variance of Rs. 1,875, and a material usage variance of Rs. 350. The material mix variance is Rs. 900 unfavorable and the material yield variance is Rs. 1,250 favorable.

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164 views

Material Variance: Unit 2 Standard Costing (MA-06101355)

The document provides information to calculate material variances for a manufacturing process. It gives the standard and actual quantities and costs of materials A, B, and C used to produce 10 units. There is a material cost variance of Rs. -2,225, a material price variance of Rs. 1,875, and a material usage variance of Rs. 350. The material mix variance is Rs. 900 unfavorable and the material yield variance is Rs. 1,250 favorable.

Uploaded by

mahendrabpatel
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Material Variance

Unit 2 Standard Costing


(MA-06101355)
Practical 1
• The standard mix to produce one unit of product is as follows:   
• Material A    60 units @ Rs. 15 per unit = Rs.     9,00
• Material B    80 units @ Rs. 20 per unit = Rs.    1,600
• Material C    100 units @ Rs. 25 per unit = Rs.    2,500         
240 units                         Rs.  5,000
During the month of April, 10 units were actually produced and
consumption was as follows:
• Material A    640 units @ Rs. 17.50 per unit = Rs.    11,200
• Material B    950 units @ Rs. 18.00 per unit = Rs.    17,100
• Material C    870 units @ Rs. 27.50 per unit =Rs.     23,925       
2,460 units             Rs.     52,225
Calculate all material variances
Solution
Material Standard for 10 units Actual for 10 units
 
A
B
C
Total
Solution
Material Standard for 10 units Actual for 10 units
  Unit Rate Amt. Rs. Unit Rate Amt. Rs.
(SQ) (SP) (AQ) (AP)

A
B
C
Total
Solution
Material Standard for 10 units Actual for 10 units
  Unit Rate Amt. Rs. Unit Rate Amt. Rs.
(SQ) (SP) (AQ) (AP)

A 600 640
B 800 950
C 1,000 870
Total
Solution
Material Standard for 10 units Actual for 10 units
  Unit Rate Amt. Rs. Unit Rate Amt. Rs.
(SQ) (SP) (AQ) (AP)

A 600 15 640 17.5


B 800 20 950 18
C 1,000 25 870 27.5
Total  
Solution
Material Standard for 10 units Actual for 10 units
  Unit Rate Amt. Rs. Unit Rate Amt. Rs.
(SQ) (SP) (AQ) (AP)

A 600 15 9,000 640 17.5 11,200


B 800 20 16,000 950 18 17,100
C 1,000 25 25,000 870 27.5 23,925
Total
Solution
Material Standard for 10 units Actual for 10 units
  Unit Rate Amt. Rs. Unit Rate Amt. Rs.
(SQ) (SP) (AQ) (AP)

A 600 15 9,000 640 17.5 11,200


B 800 20 16,000 950 18 17,100
C 1,000 25 25,000 870 27.5 23,925
Total 2,400   50,000 2,460   52,225
Solution
• (1) Material Cost Variance = (SQ X SP) –(AQ X AP)
=Rs. 50,000 – Rs.52,225 MCV  
= Rs. -2,225(A)
• (2) Material Price Variance =(SP X AQ) – (AP X AQ) OR
= (SP- AP) X AQ
Material A = (15‐ 17.50) x 640 = Rs. 1,600 (A)
Material B = (20 – 18 ) x 950 = Rs. 1,900 (F)
Material C = (25 – 27.50) x 870 = Rs. 2,175 (A)
MPV = Rs.1,875 (A)
Solution
• (3) Material Usage Variance = (SQ X SP) – (AQ X SP) OR
= (SQ- AQ) X SP
Material A = (600 – 640) x 15 = Rs. 600(A)
Material B = (800‐ 950) x 20 = Rs.3,000 (A)
Material C = (1,000 – 870 ) x 25 = Rs. 3,250 (F) MUV
                                            = Rs.350 (A)
• CHECK POINT
• MCV = MPV + MUV
• Rs. 2,225 (A) = Rs. 1,875 (A) + Rs.350 (A
Solution
• (4) Material Mix Variance = (RSQ X SP) – (AQ X SP)
Revised Standard Quantity = (TAQ / TSQ) X SQ
2460x600
Material A = = 615 Units
2400
2460x800
Material B = = 820 Units
2400
2460x1,000
Material C = = 1,025 Units
2400
• Material A = (615 ‐ 640) x 15 = Rs.375 (A)
• Material B =(820 ‐ 950) x 20 = Rs. 2,600 (A)
• Material C = ( 1,025 ‐ 870) x 25 = Rs. 3,875 (F)
• MMV = Rs. 900(F)
Solution
• (5) Material Yield Variance = (SQ- AQ) X SC
• SC= Total SC ÷ Total SQ
• =50000/2400 = 20.83
• MYV = (2400 – 2460) X 20.86
• MYV = 1250 (A)

• CHECK POINT
• MVV= MMV + MYV
• -350 = 900 + (-1250)

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