| 01. |
For a product the following data are given:
Standards per unit of product:
Direct material 24 Kg. @ Rs. 25 per kg.
Direct labour 12 hours @ Rs. 6 per hour
Actual details for given financial period:
Output produced (units) : 4,200
Direct materials:
Purchased: 1,25,000 kg for Rs. 32,50,000
Issued to production: 1,05,000 kg
Direct labour: 52,800 hours worked for Rs. 3,30,000
There was no work – in- progress at the beginning or end of the period.
You are required to calculate the material and labour/labor variances. (Material Price variance should be based on issues to production)
Solution
[TMCV = ; TMPV = ; TMUV/TMQV = ;
TMMV = and TMYV/TMSUV = ;
LCV = ; LRPV = ; LEV/LUV = ; LITV = –
LMV/LGCV = 0 and LYV/LSUV = ;]
|
| 02. |
LEGO Playware produces toys for national distribution. The management has recently established a standard cost system to control costs.
Estabished standard costs are:
| (i) | Materials: 12 pieces per unit at 64 paise per piece. |
| (ii) | Labour: 2 hours per unit at Rs. 5.25 per hour. |
During a month, the company produces 2,400 units of finished goods. Production information for the month is as follows:
| (a) | Materials: 29,400 pieces at a total of Rs. 17,640 |
| (b) | Labour Costs : Rs. 26,000 |
| (c) | Direct- Labour hours worked were 5,000 |
| (d) | Inventories: Beginning of the month, nil; End of the month, nil |
Required:
| (i) | Computation of material and labour/labor variances. |
| (ii) | A brief explanation to management giving the significance of each variance. |
Solution
[TMCV = ; TMPV = ; TMUV/TMQV = ;
TMMV = and TMYV/TMSUV = ;
LCV = ; LRPV = ; LEV/LUV = ; LITV = –
LMV/LGCV = 0 and LYV/LSUV = ;]
|
| 03. |
The following details relating to the product ‘RBT’ during a month are available. You are required to compute the materil and labour variances and also to reconcile the standard and the actual cost with the help of such variances.
Standard cost per unit:
Materials 60 kgs @ Rs. 15 per kg,
Labour 240 hours @ Rs. 5.00 per hour
Actual cost for the month
Material 6,230 kgs. @ Rs. 16 per kg,
Labour 25,100 hours @ Rs. 5.20 per hour.
Actual production – 100 units.
Solution
[TMCV = ; TMPV = ; TMUV/TMQV = ;
TMMV = and TMYV/TMSUV = ;
LCV = ; LRPV = ; LEV/LUV = ; LITV = –
LMV/LGCV = 0 and LYV/LSUV = ;]
|
| 04. |
The standard cost card for a product shows as under :
Material cost - 6 kg. @ Rs. 12.50 = Rs. 75 per unit
Wages 12 hours @ Re. 5 = Re. 60.00 per unit
The actuals which have emerged from business operations are as under :
Production : 8,000
Materials consumed - 46,500 kg @ Rs. 12.40 = Rs. 5,76,600.
Wages paid 98,000 hours @ Re. 12 = Rs. 11,76,000
Caluculate appropriate material and labour variances.
Solution
[TMCV = ; TMPV = ; TMUV/TMQV = ;
TMMV = and TMYV/TMSUV = ;
LCV = ;
LRPV = ; LEV/LUV = ; LITV = –
LMV/LGCV = 0 and LYV/LSUV = ;]
|
| 05.
|
The standard cost on ‘Material’ and ‘Labour’ for the making of a unit of certain product are estimated ad under :
Material : 75 kg. @ Rs. 12 per kg.
Labour : 16 hrs. @ Rs. 7.50 per hour.
On completion of the production of a unit, it was found that 78 kg. of material costing Rs. 13.25 per kg. has been consumed and that the time taken was 15 hours, the wage rate being Rs. 7.80 per hour.
You are required to (a) analyse material and labour variances and (b) indicate their significance.
Solution
[TMCV = ; TMPV = ; TMUV/TMQV = ;
TMMV = and TMYV/TMSUV = ;
LCV = ; LRPV = ; LEV/LUV = ; LITV = –
LMV/LGCV = 0 and LYV/LSUV = ;]
|
| 06. |
From the following records of METALLICA Ltd., you are required to compute the material and labour variances;
1 tonne of material input yields a standard output of 1 lakh units.
Number of employees is 150.
The standard wage rate per employee per day is Rs. 8
Standard price of material is Rs. 25 per kg.
Actual quantity of material issued by production department 10 tonnes.
Actual output is 9.5 lakh units.
Actual wage rate per day is Rs. 8.40.
Standard daily output per employee is 100 units.
Total number of days worked is 54.
Idle time paid for and included above is ½ day.
Solution
[TMCV = ; TMPV = ; TMUV/TMQV = ;
TMMV = and TMYV/TMSUV = ;
LCV = ; LRPV = ; LEV/LUV = ; LITV = –
LMV/LGCV = 0 and LYV/LSUV = ;]
|
| 07. |
STELLAR Ltd., turns out only one article, the prime cost standards for which have been established as follows;
| Per Completed Price |
| Material – 8 lbs. @ Rs. 4.60 | Rs. 36.80 |
| Labour – 6 Hours @ Rs. 6.20 | Rs. 37.20 |
The production schedule for a month required completion of 6,000 pieces. However, 6,180 pieces were actually completed.
Purchase for the month of July 1995 amounted to 30,000 lbs. of material at the total invoice price of Rs.1,35,000.
Production records for the month of July,1995 showed the following actual results.
| Material requisitioned and used | 25,700 | lbs |
| Direct labour – 15,150 hours | Rs. 48,480 |
Calculate appropriate material and labour variances.
Solution
[TMCV = ; TMPV = ; TMUV/TMQV = ;
TMMV = and TMYV/TMSUV = ;
LCV = ; LRPV = ; LEV/LUV = ; LITV = –
LMV/LGCV = 0 and LYV/LSUV = ;]
|
| 08.
|
In a factory the budgeted and actual figures of the cost of materials and direct labour incurred in the production during the month of January are as under:
|
Actual |
Budgeted |
| Units of Finished Goods Produced |
90,000 |
1,00,000 |
| Units of Finished Goods Produced |
90,000 |
1,00,000 |
| Materials: |
| Units |
1,82,000 |
2,00,000 |
| Cost of Materials per unit |
Re. 0.52 |
Re. 0.50 |
| Total Cost of Materials |
Rs. 94,640 |
Rs. 1,00,000 |
Direct Labour Hours
(2 units of finished goods in one hour) |
47,000 |
50,000 |
| Wages |
Rs. 2.10 per hour |
Rs. 2.00 per hour |
| Total Direct Labour Cost |
Rs. 98,700 |
Rs. 1,00,000 |
Calculate variances.
Solution
[TMCV = ; TMPV = ; TMUV/TMQV = ;
TMMV = and TMYV/TMSUV = ;
LCV = ; LRPV = ; LEV/LUV = ; LITV = –
LMV/LGCV = 0 and LYV/LSUV = ;]
|
| 09. |
From the following data of A Co.ltd. relating to budgeted and actual performance for the month of March 1987 compute the Direct Material and Direct Labour Cost variances.
Budgeted data for March:
| Units to be manufactured |
1,50,000 |
| Units of direct Material required (based on std.rates) |
4,95,000 |
| Planned Purchase of Raw Materials (units) |
5,40,000 |
| Average unit cost of Direct Material |
Rs. 8 |
| Direct Labour Hours per unit of finished goods |
¾ hr. |
| Direct Labour Cost(total) |
Rs. 29,92,500 |
Actual data at the end of a month:
| Units actually manufactured |
1,60,000 |
| Direct Material Cost (purchase cost based on units actually issued) |
Rs. 43,41,900 |
| Direct Material Cost (purchase cost based on units actually purchased) |
Rs. 45,10,000 |
| Average unit cost of Direct Material |
Rs. 8.20 |
| Total Direct Labour hours for the month |
1,25,000 |
| Total Direct Labour Cost for the month |
Rs. 33,75,000 |
Solution
[TMCV = ; TMPV = ; TMUV/TMQV = ;
TMMV = and TMYV/TMSUV = ;
LCV = ; LRPV = ; LEV/LUV = ; LITV = –
LMV/LGCV = 0 and LYV/LSUV = ;]
|
| 10. |
| Standard |
|
Actual |
| Input |
Kg. |
|
Total
Rs. |
Kg. |
|
Total
Rs. |
|
500 |
Material
@ Rs. 39 per kg. |
19,500 |
500 |
Material
@ Rs. 42 per kg |
21,000 |
|
|
Labour/Labor
4,000 hrs
@ Rs. 1.50 per hour. |
6,000 |
|
Labour/Labor
4,000 hrs
@ Rs. 1.50 per hour. |
6,000 |
| Normal Loss |
20 |
|
|
40 |
Actual Loss |
|
| Output |
480 |
|
25,500 |
460 |
|
27,000 |
Solution
[TMCV = ; TMPV = ; TMUV/TMQV = ;
TMMV = and TMYV/TMSUV = ;
LCV = ; LRPV = ; LEV/LUV = ; LITV = –
LMV/LGCV = 0 and LYV/LSUV = ;]
|
| 11. |
For unit of product A, the standard date are below.
|
Rs. |
| Material |
|
| 5 kg. @ Rs. 40 per kg |
200 |
| Labour/Labor |
|
| 40 hrs.@ Re. 1.00 per hour |
40 |
|
240 |
Actual Data
Actual production 100 units
|
Total
Rs. |
| Material 490kg. @ Rs. 42 each |
20,580 |
| Labour 3960 hrs. @ Rs. 1.10 per hour |
4,356 |
|
24,936 |
Calculate variances.
Solution
[TMCV = ; TMPV = ; TMUV/TMQV = ;
TMMV = and TMYV/TMSUV = ;
LCV = ; LRPV = ; LEV/LUV = ; LITV = –
LMV/LGCV = 0 and LYV/LSUV = ;]
|
| 12. |
TESCO Ltd. follows standard consting system and the following information is available for a month.
(a) Actual production - 1,500 kg.
| Materials consumed |
|
Labour deployed |
| Type |
Quantity
(kg) |
Rate
(Rs. per kg) |
Worker |
Timeworked
(hours) |
Rate
(Rs. per hour) |
| A |
550 |
5.00 |
P |
32 |
11.00 |
| B |
200 |
6.00 |
Q |
14 |
9.00 |
| C |
350 |
2.00 |
R |
20 |
11.00 |
| D |
400 |
2.00 |
S |
10 |
18.00 |
(b) Details of standard materials and labour cost based on producton of 1,000 kgs are as under.
| Consumption of Materials |
|
Deployment of Labour |
| Type |
Quantity
(kg) |
Rate
(Rs. per kg) |
Worker |
Timeworked
(hours) |
Rate
(Rs. per hour) |
| A |
400 |
4.00 |
P |
20 |
10.00 |
| B |
100 |
5.00 |
Q |
10 |
8.00 |
| C |
200 |
2.50 |
R |
15 |
12.00 |
| D |
300 |
6.00 |
S |
7 |
20.00 |
Solution
[TMCV = ; TMPV = ; TMUV/TMQV = ;
TMMV = and TMYV/TMSUV = ;
LCV = ; LRPV = ; LEV/LUV = ; LITV = –
LMV/LGCV = 0 and LYV/LSUV = ;]
|
| 13. |
The following standards have been set to manufacture a product:
|
Rs. |
| Direct Materials: |
|
| 2 units of A at Rs. 4 per unit |
8.00 |
| 3 units of B at Rs.3 per unit |
9.00 |
| 15 units of C at Re.1 per unit |
15.00 |
|
32.00 |
| Direct labour 3 hours (@ Rs.8 per hour) |
24.00 |
| Total Standard Price Cost |
56.00 |
The Company manufactured and sold 6,000 units of the product during the year. Direct Material Costs were as follows:
12,500 units of A at Rs. 4.40 per unit
18,000 units of B at Rs.2.80 per unit
88,500 units of C at Rs.1.20 per unit
The company worked 17,500 direct labour hours during the year. For 2,500 of these hours the company paid at Rs. 12 per hour while for the remaining the wages were paid at the standard rate.
Calculate Material and Labour Variances.
Solution
[TMCV = ; TMPV = ; TMUV/TMQV = ;
TMMV = and TMYV/TMSUV = ;
LCV = ; LRPV = ; LEV/LUV = ; LITV = –
LMV/LGCV = 0 and LYV/LSUV = ;]
|
| 14. |
A Chemical Co gives you the following standard and actual data of its chemical No. 206. You are required to calculate variances.
| Standard data |
Total |
|
Actual data |
Total |
| kg |
|
Rs. |
Rs. |
kg |
|
Rs. |
Rs. |
| 450 |
of Mat. A @ Rs. 20/kg |
9,000 |
|
450 |
@ Rs. 19/kg |
8,550 |
|
| 360 |
of Mat. B @ Rs. 10/kg |
3,600 |
12,600 |
360 |
@ Rs. 11/kg |
3,960 |
12,510 |
| 810 |
|
|
|
810 |
|
|
|
| |
2,400 skilled hours
@ Rs. 2/hr |
4,800 |
|
|
2,400 hours
@ Rs. 2.25/hr |
5,400 |
|
| |
1,200 un-skilled hours
@ Rs. 1/hr |
1,200 |
6,000 |
|
1,200 hours
@ Rs. 1.25/hr |
1,500 |
6,900 |
| 90 |
Normal Loss |
|
|
50 |
Actual Loss |
|
|
| 720 |
|
|
18,600 |
760 |
|
|
19,410 |
Solution
|
| 15. |
| Standard |
|
Actual |
| Input |
Material |
Rs. Per |
|
|
Total |
Input |
Rs. per |
|
|
Total |
| kg |
|
kg |
Rs. |
Rs. |
kg |
kg |
Rs. |
Rs. |
| 400 |
A |
@ 50 |
20,000 |
|
420 |
@ 45 |
18,000 |
|
| 200 |
B |
@ 20 |
4,000 |
|
240 |
@ 25 |
6,000 |
|
| 100 |
C |
@ 15 |
1,500 |
25,500 |
90 |
@ 15 |
1,350 |
26,250 |
| 700 |
|
|
|
|
750 |
|
|
|
| |
Labour |
|
|
|
|
|
| |
100 Man hrs.
@ Rs. 2/hr. |
200 |
|
|
120 hrs
@ Rs. 2.50/hr. |
300 |
|
| |
200 Women hrs.
@ Rs. 1.50/hr. |
300 |
500 |
|
240 hrs
@ Rs. 1.60/hr. |
384 |
684 |
| 25 |
Normal Loss |
|
|
75 |
Actual Loss |
|
|
| 675 |
|
|
|
26,000 |
675 |
|
|
26,934 |
From the above information calculate variances.
Solution
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cost,material,labour,fixed,variable,overhead,sales,profit,variance,reconciliation,standard,actual,formula interpretation,accounting.
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