Materials :: Recalculating Standard Quantity/Cost for actual input

Formula » Standard Quantity for Actual Input

This has relevance only when two or more types of materials are being used in the production process. It indicates the quantity of each material that should have been present in the actual mix had the materials been taken in standard mix ratio. Consider the following data arranged in a working table. Standard [Production: 9500 units] Actual [Production: 22,800 units] Quantity (kgs) Price Rs/kg Value/Cost (Rs) Quantity (kgs) Price Rs/kg Value/Cost (Rs) Material A 900 15 13,500 2,250 16 36,000 Material B 800 45 36,000 1,950 42 81,900 Material C 200 85 17,000 550 90 49,500 Total 1,900   66,500 4,750   1,67,400 Standard Quantity for Actual Input The logic behind the calculation and the formula for deriving the required quantity For Each Material Separately Logic If the Standard Quantity of Standard Mix is 1,900 kgs Standard Quantity of Material A is 900 kgs If the Standard Quantity of Standard Mix is 4,750 kgs Standard Quantity of Material A would be ? Standard Quantity of a Material for Actual Input/Mix of 4,750 kgs = 4,750 kgs {Actual Quantity of Mix} 1,900 kgs {Standard Quantity of Mix} × 900 kgs {Standard Quantity of the Material in the Standard Mix}   ⇒ SQMat for AI = AQMix SQMix × SQMat Using the data in the above example, Standard Quantity for Actual Input [SQ for AI] for Material A = 4,750 kgs 1,900 kgs × 900 kgs = 2.5 × 900 kgs ⇒ SQA for AI = 2,250 kgs Material B = 4,750 kgs 1,900 kgs × 800 kgs = 2.5 × 800 kgs ⇒ SQB for AI = 2,000 kgs Material C = 4,750 kgs 1,900 kgs × 200 kgs = 2.5 × 200 kgs ⇒ SQC for AI = 500 kgs Total 4,750 kgs For all Materials together Calculating this for all the materials together doesn't carry any meaning. Check If the Standard Quantity of Standard Mix is 1,900 kgs Standard Mix is 1,900 kgs If the Standard Quantity of Standard Mix is 4,750 kgs Standard Mix would be ?? Standard Mix for Actual Mix of 4,750 kgs = 4,750 kgs {Actual Quantity of Mix} 1,900 kgs {Standard Quantity of Mix} × 1,900 kgs {Standard Quantity of Mix} = 4,750 kgs   ⇒ SQMix for AI = AQMix Using the data in the above example, Standard Quantity for Actual Input [SQ for AI] for All Materials = AQMix ⇒ SQMix for AI = AQMix = 4,750 kgs

Standard Cost of Standard Quantity for Actual Input [SC of SQ for AI]

It indicates the cost of each material that should have been incurred had the materials been present in the actual mix in standard (mix) ratio and have been valued at the standard rates. Consider the following data arranged in a working table. Standard [Production: 9500 units] Actual [Production: 22,800 units] Quantity (kgs) Price Rs/kg Value/Cost (Rs) Quantity (kgs) Price Rs/kg Value/Cost (Rs) Material A 900 15 13,500 2,250 16 36,000 Material B 800 45 36,000 1,950 42 81,900 Material C 200 85 17,000 550 90 49,500 Total 1,900   66,500 4,750   1,67,400 For Each Material Separately Standard Cost of Standard Quantity for Actual Input = Standard Quantity for Actual Input × Standard Price.   ⇒ SC of SQMat for AI = SQMat for AI × SPMat (Or) = AQMix SQMix × SQMat × SPMat (Or) = AQMix SQMix × SCMat Using the data in the above example, Standard Cost of Standard Quantity for Actual Input [SC of SQ for AI] for Material A = 4,750 kgs 1,900 kgs × 900 kgs × Rs. 15/kg = 2.5 × Rs. 13,500 ⇒ SC of SQA for AI = Rs. 33,750 Material B = 4,750 kgs 1,900 kgs × 800 kgs × Rs. 45/kg = 2.5 × Rs. 36,000 ⇒ SC of SQB for AI = Rs. 90,000 Material C = 4,750 kgs 1,900 kgs × 200 kgs × Rs. 85/kg = 2.5 × Rs. 17,000 ⇒ SC of SQC for AI = Rs. 42,500 Total Rs. 1,66,250 For All Materials Together Standard Cost of Standard Quantity for Actual Input = Standard Quantity for Actual Input × Standard Price.   ⇒ SC of SQMix for AI = SQMix for AI × SPMix (Or) = AQMix × SPMix Using the data in the above example, Standard Cost of Standard Quantity for Actual Input [SC of SQ for AI] for All Materials = AQMix × SPMix ⇒ SC of SQMix for AI = 4,750 kgs × Rs. 35/kg = Rs. 1,66,250 Standard Price of Mix = Standard Cost of Mix Standard Quantity of Mix ⇒ SPMix = SCMix SQMix Using the data in the above example, Standard Price of Mix ⇒ SPMix = Rs. 66,500 1,900 kgs = Rs. 35/kg

Standard Output/Yield for Actual Input [SO/SY for AI]

Yield and Output are synonymously used. Standard Output/Yield indicates the output that should have been achieved had the production been normal. Consider the following data arranged in a working table. Standard [Production: 9500 units] Actual [Production: 22,800 units] Quantity (kgs) Price Rs/kg Value/Cost (Rs) Quantity (kgs) Price Rs/kg Value/Cost (Rs) Material A 900 15 13,500 2,250 16 36,000 Material B 800 45 36,000 1,950 42 81,900 Material C 200 85 17,000 550 90 49,500 Total 1,900   66,500 4,750   1,67,400 For Each Material Separately As per standards, if the Quantity of Material A is 900 kgs Output is 9,500 units If the Quantity of Material A is 2,250 kgs (actual used) Output should have been ? Standard Output/Yield for Actual Input (of Material A) = 2,250 kgs {Actual Quantity} 900 kgs {Standard Quantity} × 9,500 units {Standard Output}   ⇒ SO for AIMat = AQMat SQMat × SO Using the data in the above example, Standard Output/Yield for Actual Input of Material A = 2,250 kgs 900 kgs × 9,500 units = 2.5 × 9,500 units ⇒ SO for AIA = 23,750 units Material B = 1,950 kgs 800 kgs × 9,500 units = 2.4375 × 9,500 units ⇒ SO for AIB = 23,156.25 units Material C = 550 kgs 200 kgs × 9,500 units = 2.75 × 9,500 units ⇒ SO for AIC = 26,125 units For All Materials Together As per standards, if the Quantity of Mix is 1,900 kgs Output is 9,500 units If the Quantity of Mix (actual input) is 4,750 kgs Output should have been ? Standard Output/Yield for Actual Input (of Mix) = 4,750 kgs {Actual Mix} 1,900 kgs {Standard Mix} × 9,500 units {Standard Output}   ⇒ SO for AIMix = AQMix SQMix × SO Using the data in the above example, Standard Output/Yield for Actual Input of Material Mix = 4,750 kgs 1,900 kgs × 9,500 units ⇒ SO for AIMix = 2.5 × 9,500 units = 23,750 units Note The standard output for the actual mix is not equal to the sum of the Standard Outputs for each material separately.

Standards » For Actual Output vs. For Actual Input

In the recalculated figures, where you recalculate standards for the actual output, the standard output and the actual output would be the same The factor used for incorporating the change is AO SO In the recalculated figures, where you recalculate standards for the actual input, the standard input (mix) and the actual input (mix) would be the same The factor used for incorporating the change is AQMix SQMix You may not need to recalculate standards !!! In solving problems, we can make use of formulae which would enable us to calculate all the material variances without recalculating the standards, by incorporating the above mentioned adjustment factors in the formulae itself. All the formula that we use and advocate are those which have this adjustment factor built into it thus enabling you to use the same set of formulae in all situations.

Author Credit : The Edifier

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