Material Variances - Single Material - Problems involving Losses and Stocks

S1

Problem 1

The standard cost card shows the following details relating to the materials needed to produce 1 kg. of groundnut oil:

Quantity of groundnut = 4 kg.

Price of groundnut = 2.45 per kg

Actual production data:

Production during a week = 1,000 kg

Quantity used = 4,600 kg.

Price of groundnut = 2.75 per kg.

Calculate all possible material variances:

Solution Ans:
1
MYV/MSUV
MMV 		− 1,470
0
MQV/MUV
MPV 		− 1,470
− 1,380
MCV − 2,850

Problem 2

A Ltd. has introduced Standard Costing System and has furnished the following information:

Standard:

Materials for 70 kg. of Finished Goods 100kg.
Price of materials 1 per kg.

Actual:

Output 2,10,000 kg.
Material used 2,80,000 kgs
Cost of materials 2,52,000

Calculate the various variances in respect of Material Cost.

Solution Ans:
1
MYV/MSUV
MMV 		+ 20,000
0
MQV/MUV
MPV 		+ 20,000
+ 28,000
MCV + 48,000

Problem 3

Find out Material Cost Variance, Material Price Variance and Material usage variance from the following :

Material Purchased
Value of Materials Purchased
Standard Quantity for one unit
Standard Rate of Materials
Opening Stock of Materials
Closing Stock of Materials
Finished goods 		6000 kg.
15,000
2.5 kg.
2 per kg.
1000 kg.
2000 kg.
2,140 units.
Solution Ans:
1
MYV/MSUV
MMV 		+ 700
0
MQV/MUV
MPV 		+ 700
− 2,500
MCV − 1,800

Problem 4

Calculate the material variances for the following:

Opening stock 100 kgs
Purchased during the period 3,000 kg. cost 6,200
Standard 2 kg. per unit at 2 per kg.
Original budget 2,000 units
Production 1,600
Sales 1,400 units
Closing stock 200 kg.
Solution Ans:
1
MYV/MSUV
MMV 		+ 420
0
MQV/MUV
MPV 		+ 420
− 299
MCV + 121

Problem 5

From the following you are required to calculate all possible material variances:

Quantity of material purchased : 8,000 lbs

Value of material purchased : 56,000.

Standard of quantity of material required for one unit of finished product : 34 lbs.

Standard rate of material : 6.50 per lb.

Opening stock of material : 1,010 lbs

Finished production during the period : 250 units

Solution Ans:
1
MYV/MSUV
MMV 		− 3,315
0
MQV/MUV
MPV 		− 3,315
− 4,505
MCV − 7,820

Problem 6

From the following you are required to calculate material variances:

Quantity of material purchased : 3,000 units

Value of material purchased : 9,000.

Standard of quantity of material required for one Tonne of finished product : 75 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 tonnes

Solution Ans:
1
MYV/MSUV
MMV 		− 3,000
0
MQV/MUV
MPV 		− 3,000
− 7,500
MCV − 10,500

Problem 7

Standards set for material consumption in the manufacture of a product was 600 kgs @ 4.50 per kg.

In a cost period:

Opening stock was 500 kg @ 4.40 per kg.

Purchases made 2,500 kg @ 5 per kg.

Consumption 750 kg.

Calculate

  1. Cost Variance
  2. Usage Variance

  3. Price Variance, when it is calculated

    1. during the period of purchase
    2. during the period of issue on FIFO basis
    3. during the period of issue on LIFO basis.
  4. Mix Variance
  5. Yield Variance

What would be the effect of such valuations on closing stock valuation?.

Solution Ans:
1
MYV/MSUV
MMV 		− 675
0
MQV/MUV
MPV 		− 675
− 1,252.5
MCV − 1,927.5

Problem 8

ABC (P) Ltd., uses a standard costing system, with its material stock account being maintained at standard costs. The following details have been extracted from the standard cost card in respect of direct materials.

8 kg at 8.00/kg = 64 per unit

Budgeted production in January was 1,250 units.

The following details relate to actual materials purchased and issued to production during January, when actual production was 1,200 units.

Material purchased 12,000 kg costing 1,00,800

Materials issued to production 10,000 kg.

Find the material variances to be reported.

Solution Ans:
1
MYV/MSUV
MMV 		− 3,200
0
MQV/MUV
MPV 		− 3,200
− 4,800
MCV − 8,000
Author : The Edifier
S3