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Standard Costing 1. Materials and Labor Variance Analysis

The document discusses three topics: 1. Materials and labor variance analysis for a company that produced 120 units of a product compared to its standard. It requires calculating variances for materials and labor costs. 2. Factory overhead variance analysis using the two-way, three-way, and four-way variance methods for a company that had actual overhead and production different than its budget. It requires calculating several overhead variances. 3. Materials price, mix and yield variance analysis for a company that produced a product using different actual quantities and costs than standards. It requires calculating the variances for materials costs.

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Royce Maenard Estanislao
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552 views3 pages

Standard Costing 1. Materials and Labor Variance Analysis

The document discusses three topics: 1. Materials and labor variance analysis for a company that produced 120 units of a product compared to its standard. It requires calculating variances for materials and labor costs. 2. Factory overhead variance analysis using the two-way, three-way, and four-way variance methods for a company that had actual overhead and production different than its budget. It requires calculating several overhead variances. 3. Materials price, mix and yield variance analysis for a company that produced a product using different actual quantities and costs than standards. It requires calculating the variances for materials costs.

Uploaded by

Royce Maenard Estanislao
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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STANDARD COSTING

1. Materials and Labor Variance analysis

Jeremiah Company has established the following standards for one unit of its metallic product, the
wonder camera tripod (stainless edition):

Inputs Standards
Direct materials 3 metal bars at P2 per bar
Direct labor ½ labor hour at P10 per hour

 At the start of the month, the budget includes a planned production of 100 units of tripod based on
normal capacity.
 At the end of the month, actual production was 120 units of tripod, which resulted to using 400 bars
of metal, purchased at a cost of P2.10 per bar.

Required:

1. Based on the Budgeted production of 100 units:


a. How many metal bars must the company plan to use? (Budgeted quantity)
b. How much material cost is included in the budget? (Budgeted cost)

2. Determine the actual cost of materials used (Actual cost)

3. Based on the actual production of 120 units:


a. How many metal bars should have been used? (Standard quantity)
b. How much material cost should have been incurred? (Standard material cost)
c. How many labor hours should have been spent? (Standard hours)
d. How much labor cost should have been incurred? (Standard labor cost)

4. Determine the following:


a. Materials budget variance
b. Material standard cost variance
c. Materials quantity and price variance

5. In the following month, Jeremiah purchased 500 metal bars at a total cost of P850 while only
400 metal bars were used; the standard quantity allowed for the actual production was 380
bars. Determine the following:
a. Total materials variance
b. Materials quantity variance
c. Materials price usage variance
d. Materials purchase price variance

6. During the month, total payroll of P540 was paid to laborers, working 45 labor hours, to produce
the 120 units of tripod. Determine the following:
a. Total labor variance
b. Labor efficiency variance
c. Labor rate variance

2. Factory overhead variance analysis (Two, Three, Four-way Variance method)

Ezekiel company provides the following production data:

Total standard overhead cost per unit of a product: 4 hours at 3.00 per hour

 Budgeted fixed factory overhead P20,000


 Normal production 2,500 units
 Actual production 2,000 units
 Actual hours 7,500 hours
 Actual factory overhead incurred (75% fixed) P26,000

Required: Determine the following:

a. Budget factory overhead


b. Standard factory overhead
c. Budgeted FOH based on actual hours
d. Budgeted FOH based on standard hours
e. Controllable variance
f. Volume variance
g. Spending variance
h. Variable efficiency variance
i. Variable spending variance
j. Fixed spending variance

3. Materials price, Mix and Yield variances

Haggai manufacturing produces product ABC. Haggai has in its budget the following standards for one
kilo of a product ABC:

Ingredients Standard quantity Standard unit cost Standard cost


A (20%) 200 grams P3.00 P600
B (70%) 700 grams P4.00 P2,800
C (10%) 100 grams P5.00 P500
TOTAL 1,000 grams P3,900

The company reported the following production and cost data for the 2019 operations:

Ingredients Actual quantity Standard unit cost Standard cost


A 45,000 grams P4.00 P180,000
B 125,000 grams P3.00 P375,000
C 30,000 grams P6.00 P180,000
200,000 grams P735,000
The company produced 190 kilos of product ABC in 2019.

Required:

a. Total materials cost variance


b. Materials price variance
c. Materials mix variance
d. Materials yield variance

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