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Standard Costing Examples

The document provides multiple illustrations for calculating material variances, including Material Cost Variance, Material Usage Variance, and Material Price Variance. Each illustration presents standard and actual data for different products, along with the calculated variances, indicating whether they are favorable (F) or adverse (A). The calculations show discrepancies between standard and actual material usage and costs across various scenarios.

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suyash.r24-26
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103 views4 pages

Standard Costing Examples

The document provides multiple illustrations for calculating material variances, including Material Cost Variance, Material Usage Variance, and Material Price Variance. Each illustration presents standard and actual data for different products, along with the calculated variances, indicating whether they are favorable (F) or adverse (A). The calculations show discrepancies between standard and actual material usage and costs across various scenarios.

Uploaded by

suyash.r24-26
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Illustration 1

Product A required 10 kg of material at a rate of ₹4 per kg. The


actual consumption of material for the manufacturing product A
comes to 12 kg of material at the rate of ₹4.50 per kg.
Calculate: (a) Material Cost Variance
(b) Material Usage Variance
(c) Material Price Variance.
Answers:
a. Material Usage Variance =₹ 8 (A)
b. Material Price Variance = ₹6 (A)
c. Material Cost Variance = ₹14 (A)

Illustration 2
A manufacturing concern which has adopted standard costing
furnishes the following information.
Standard
Material for 70 Kg of finished product of 100 Kg
Price of materials Re.1 per kg
Actual

Output 2,10,000 kg.

Material used 2,80,000 kg.

Cost of materials ₹ 2,52,000

Calculate:
a. Material Usage Variance
b. Material Price Variance
c. Material cost Variance
Answers
a. Material Usage Variance = ₹ 20,000 (F)
b. Material Price Variance = ₹28,000(F)
c. Material Cost Variance = ₹48,000(F)

Illustration 3
From the following you are required to calculate
(a) Material Usage Variance
(b) Material Price Variance
(c) Material Cost Variance
Quantity of material purchased 3,000 units
Value of material purchased ₹ 9,000
Standard quantity of material required
for one tonne of finished product 25 units
Standard rate of material ₹ 2 per unit
Opening stock of material NIL
Closing stock of material 500 units
Finished production during the period 80 units
Answers:
a. Material usage variance = 1,000 (A)
b. Material price variance = ₹ 2,500 (A)
c. Material cost variance = ₹ 3,500 (A)

Illustration 4
The standard quantity and standard price of raw material required
for one unit of product A are given as follows
Quantity (kg.) S.P. (₹)

Material X 2 3
Material Y 4 2
The actual production and relevant data are as follows:
Material X 1,100 kgs. @ ₹ 3,410
Material Y 1,800 kgs. @ ₹ 3,960
Calculate Variances. Actual production was 500 units.
Answers

Material Mix variance =₹ 133 (A)


Material Usage variance = ₹100 (F)
Material price variance = ₹470 (A)
Material cost variance = ₹370 (A)

Illustration 5
From the data given below, calculate the Material Price Variance,
Material Usage Variance and Material Mix Variance:

Raw Material Standard Actual


A 40 units @ ₹50 per 50 units @ ₹50 per
unit unit

B 60 units @ ₹40 per 60 units @ ₹45 per


unit unit

Answers:
Material Sub-Usage Variance = ₹ 440 (A)
Material Mix Variance = ₹ 60 (A)
Material Usage Variance = ₹ 500 (A)
Material Price Variance = ₹ 300 (A)
Material Cost Variance = ₹ 800 (A)

Illustration 6 & 7

1. The standard and actual figures of product are


Standard Actual
50 Units 45 units Material Quantity
₹1.00 ₹0.80 Material Price per unit

Calculate Material Cost Variance


2. NX Manufacturing Concern furnishes the following information:
Standard: Material for 70kg finished products 100kg
Price of material per kg Rs. 1
Actual: Output 2,10,000 kg
Material used 2,80,000 kg
Cost of materials ₹2,52,000
Calculate (i) Material usage variance (ii) Material price variance (iii) Material cost variance

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