Question: With Help of following data calculate Material & Labour Variances:

Material
A
B
C
D
Labour
L1

Standard Cost
Quantity
Rate Per Tonnes
(Tonnes)
(Rs.)
3000
1000
2400
800
500
4000
100
30000
Standard Cost
Hours
Hourly Rate
(Rs.)
60000
15

L2

40000

30

Actual Cost
Quantity
Rate Per Tonnes
(Tonnes)
(Rs.)
3400
1100
2300
700
600
3900
90
31500
Actual Cost
Hours
Hourly Rate
(Rs.)
56000
18
38000

Ans:
Material Variance
Material Cost Variances: (SQ X SP) - (AQ X AP)
A: (3000 X 1000) - (3400 X 1100)
= 30,00,000 - 37,40,000

-740000 (A)

B: (2400 X 800) - ( 2300 X 700 )

= 19,20,000 - 16,10,000

310000 (F)

C: (500 X 4000) - ( 600 X 3900)

= (20,00,000 - 23,40,000)

-340000 (A)

D: ( 100 X 30000) - ( 90 X 31500)

= 30,00,000 - 28,35,000)

165000 (F)
-605,000 (A)

Material Price Variances: AQ (SP - AP)

A: 3400 (1000 - 1100)

-340000 (A)

B: 2300 (800 - 700)

230000 (F)

C: 600 (4000 - 3900)

60000 (F)

D: 90 (30000 - 31500)

Material Usage Variances:

A : ( SQ X SP ) - (AQ X SP)
( 3000 X 1000) - ( 3400 X 1000)
B: (2400 X 800) - (2300 800)
C: (500 X 4000) - ( 600 X 4000)

-135000 (A)
-185000 (A)

-400000 (A)
80000 (F)
-400000 (A)

35

D: (100 X 30000) - (90 X 30000)

300000 (F)
-420000 (A)

Verification:
MCV = MPV + MUV
605000 (A) = 185000(A) + 420000(A)

L1

SH X SR
60000 X 15

L2

40000 X 30

L1

Labour Variance
AH X AR
900000
56000 X 18
1200000

Labour Cost Variances:

: (SH X SR ) - ( AH X AR)
900000 - 1008000

L2 1200000 - 1330000

L1

Labour Rate Variances:

: AH (SR-AR)
56000 (15-18)

L2 38000 (30-35)

L1

Labour Efficincy Variances:

: (Sh x SR) - (AH X SR)
900000 - 840000

L2 1200000 - 1140000

Verification:
LCV = LRV + LEV
238000(A) = 358000(A) + 120000(F)

38000 X 35

-108000 (A)
-130000 (A)
-238000 (A)

-168000 (A)
-190000 (A)
-358000 (A)

60000 (F)
60000 (F)
120000 (F)

1008000

AH X SR
56000 X 15

1330000

38000 X 30

AH X SR
840000
1140000