STANDARD COSTING (PROBLEMS)

MATERIAL VARIANCES:
1)
SC = SQ X SR
2)
AC = AQ X AR
3)
MCV = (SQ X SR) (AQ X AR)
4)
Or MCV = SC - AC
5)
MPV = (SR AR) AQ
6)
MUV = (SQ AQ) SR
7)
SQ/SQ for AO = SQ X AO (when SO #
AO)
SO
8)
MMV = (RSQ AQ) SR
9)
10)
11)
12)

MYV = (SQ RSQ) SR

RSQ = SQ X TAQ
TSQ
MCV = MPV + MUV
MUV = MMV + MYV

Problems on Material Variances:

1)
The standard cost of material for
manufacturing 1 unit of finished product is
estimated as follows.
16 kgs of material @ Re 1 per kg.
On completion of production of 1 unit it
was found that 20 kgs of material @
Rs.1.50 has been consumed.
Calculate : MCV, MPV and MUV
2)
A product X requires 10 kgs of
material @ Rs.4 per kg. Actual
consumption of material for
manufacturing of product X 12 kgs @
Rs.4.50 per kg.
Calculate Material Variances.
3)
Calculate Actual Cost when AQ is
15000 kgs and AR Rs.5 per kg.
4)
If AC is Rs.10,000 and AQ consumed
2,500 kgs calculate AR per kg.
5)
If SC is Rs.10,000 and SR per kg is Rs.2
calculate SQ

6)
Product Xrequires 10 kgs of material
at standard cost of Rs.35/The actual cost incurred Rs.39/- and actual
rate paid Rs.3 per kg. calculate Material
Variances.

7)
From the following data calculate SR if
MPV is 12 A and standard material 10 kgs
and actual material 12 kgs at actual cost
of Rs.72

8)
Find MCV, MPV and MUV from the
following:
SQ 6 kgs per unit and SP Rs.4/- per kg.
Actual units produced 1000 by
consuming 5,730 kgs at Rs.3.75 per kg.

(hint: convert SQ into SQ for AO)

(Ans:MCV:2512.50 F, MPV:1432.5 F , MUV
1080 F)

9)
From the following information find SQ
when MUV is 25 F
SR Rs.5
AC Rs.120
AR Rs.8 (Ans SQ= 20kgs.)

10) For production of 1 unit of product A

SQ 5 kgs and SR Rs. 5 per kg. During the
period company manufactured 400 units
of productA by consuming 2200 kgs of
material at a total cost of Rs.10,560/calculate relevant Material Variances.
(Ans MCV=560A, MPV=440F, MUV=1000A)

11) Calculate material variances from the

following input:
SR Rs.20 per kg, SC Rs.10 per unit, AO
1600 units, AC Rs.16,800 and AQ 960 kgs.

12) Calculate MCV, MPV and MUV from the

following standard for 1 unit SR Rs.8/- per
kg and material required 3 kgs. Whereas

actual units produced 650 by consuming

1850 kgs of material at total cost of
Rs.16,095/-.

13) For producing 10 units of product R

the material requirement is
Material A 6 kgs @ Rs 8/- per kg.
Material B 5 kgs @ Rs 6/- per kg.
During a month 1000 units of product R
were produced. Actual consumption of
materials:
Material A 650 kgs @ Rs.7.50 per kg.
Material B 600 kgs @ Rs.7/- per kg.
Calculate: MCV,MPV, MUV, MMV and MYV.
(hint :find SQ for AO and RSQ)
14) From the following data calculate
Material Variances:

Material
X
Material
Y

Standard
40 kgs @
50/- per kg.
50 kgs @
40/- per kg.

Actual
50 kgs @
50/- per
kg.
60 gs
@
45/per
kg.

15) From the following data calculate

Material Variances:
Materi
al

Standard
Quantity(
Kg)

A
B
C

10
20
20

Actual

Rate Quantity( Rate

Rs
kg)
Rs
per
per
kg
kg
2
05
3
3
10
6
6
15
5

(Total MCV= 50 F; Total MPV= 20 A;

MUV=70 F; Total MMV= 10A; Total MYV =
80 F)

LABOUR VARIANCES

 Labour Cost Variance (LCV)

= (SH x SR) - (AH x AR)
Labour Rate Variance (LRV)
= (SR AR)AH
Labour Efficiency Variance (LEV)
= (SH AH)SR
Labour Mix(Gang) Variance (LMV)
= (RSH AH)SR
Labour Yield Variance
= (SH RSH)SR
Working Note:
(1)

When SO # AO
SH for AO = SH/SO X AO
(2) To Calculate Revised Standard Hours
(RSH) = SH/TSH X TAH
Problems:

(1) Data relating for a Job are given below:

Standard Rate of wages per hour is Rs.10
(SR)
Actual Rate of Wages per hour is Rs.12
(AR)
Standard Hours required 300
(SH)
Actual Hours worked 200
(AH)
Calculate:
a) Labour Cost Variance (LCV)
b) Labour Rate Variance (LRV)
c) Labour Efficiency Variance (LEV)
(2) If SH is 40, SR is 3, AH is 50 and AR is
4. Calculate LCV,LRV and LEV
(3) If standard output is 10units, SH
required 8640 and SR Rs.3 per hour
Actual units produced 10, AH worked 8200
and Actual amount of wages paid
Rs.27,880. Calculate possible Labour
Variances.

(4)

When SO # AO

For manufacturing of one finished unit of

output time required is 15 hours and
wages Rs. 4 per hour.
During a particular period company
actually manufactured 1000 units by
paying total amount of wages Rs.59,670
i.e at the rate of Rs.3.90 per hour.
Calculate Labour Variances.

(5)

(6)
(7)

5)

Calculate LCV, LRV, LEV, LMV and LYV.

Type of
Labour

Standard
Hour Rat
s
e
Skilled
288 20
Labour
0
10
Semi Skilled 192
Labour
0
Output
108 units

Actual
Hou Rat
rs
e
176 25
0
05
264
0
90 units

6)

Assignment

Type of Labour
Skilled Labour
Unskilled
Labour
Semi Skilled
Labour
Output

Standard
Actual
Rate Hour Rat hour
p/hr
s
e
s
p/h
r
15
05 20 450
05
08 4.5
0
07
04
0 100
7.5 00
0 420
0
1unit
1000
units

SALES VARIANCES
Sales Value Variance
(AQ x AP) (BQ x BP)
Sales Price Variance
(AP - BP)AQ
Sales Volume Variance
(AQ - BQ)BP
Sales Mix Variance
(AQ RSQ)BP
Sales sub-volume (Qty) Variance
(RSQ - BQ)BP

=
=
=
=
=

Problems: (1) Calculate Sales Variances:

Product

A
B

Budgeted Sales
Quantit
Price
y
(Rs)
Units
1,000
2.10
3,000
3.25

Actual Sales
Quantit
Price
y
(Rs.)
Units
1,800
2.50
4,200
2.75

Assignment
Product

Budgeted Sales
Actual Sales
Quantit
Price
Quantit
Price
y
(Rs.p/u)
y
(Rs.p/u)
Units
Units
X
50,000
5
60,000
6
Y
40,000
6
50,000
5
Z
30,000
7
40,000
8
Calculate Sales Variances