# Problem 1

From the following information, calculate the variances:
Material Standard Actual
Usage
kg.
Rate
per kg.
Total
Usage
kg.
Rate
per kg.
Total
P 60 3 180 50 4 200
Q 40 7 280 35 6 210
Gross Input 100   460 85   410
Less: Normal loss   10 Less: Actual Loss 7
Output 90     78

Solution [TMCV = + 11.33 ; TMPV = − 15; TMUV/TMQV = + 3.67; TMMV = − 4 ; TMYV/TMSUV = + 7.67;]

# Problem 2

From the following information, calculate the variances:

Material Standard Actual
Tonnes Rate Tonnes Rate
P 150 13 170 12
Q 80 8 55 9
Gross Input 250   225
Less:Loss   25   18
Output 225   207

Solution
[TMCV = − 152.20; TMPV = + 115; TMUV/TMQV = − 267.20; TMMV = − 319 ;
TMYV/TMSUV = − 51.80;]

# Problem 3

The following are the standard and actual cost details of a product:

Material Standard Actual
Quantity
kg.
Rate
per kg.
Amount
Quantity
kg.
Rate
per kg.
Amount
F 1,200 12 14,400 1,250 13 16,250
G 700 14 9,800 740 15 11,100
H 600 10 6,000 860 9 7,740
Gross Input 2,500 12.08 30,200 2,850 15.60 35,090
Less:Wastage 250 2 500 375 ?? ??
Output 2,250 13.20 29,700 2,475 ?? ??

Solution
[TMCV = − 1,870; TMPV = − 1,130;TMUV/TMQV = − 740; TMMV = + 468;TMYV/TMSUV = − 1,208; ]

# Problem 4

From the following calculate all possible material variances

Material Standard Mix Actual Mix
Material A 90 units costing 3,600 450 units costing 18,900
Material B 60 units costing 1,800 300 units costing 10,500

Standard Loss allowed is 10% of input and standard rate of scrap realisation is 6 per unit. Actual output is 648 units.

Solution
[TMCV = − 3,480; TMPV = − 2,400; TMUV/TMQV = − 1,080; TMMV = Nil;TMYV/TMSUV = − 1,080; ]

# Problem 5

The standard cost of a chemical mixture is as under

250 tons of material M @ 12,000 per ton
375 tons of material N @ 14,000 per ton

Standard yield is 80% of input.

Actual cost for a period is as under

255 tons of material M @ 11,000 per ton
370 tons of material N @ 15,000 per ton

Actual Yield is 525 tons
Compute Material Variances.

Solution
[TMCV = + 3,07,500; TMPV = − 1,15,000; TMUV/TMQV = + 4,22,500; TMMV = + 10,000;
TMYV/TMSUV = + 4,12,500; ]

# Problem 6

124 kgs of Material A at a standard price of 2 per kg. and 126 kgs of material B at a standard price of 6 per kg were to be used to manufacture 200 kgs of a chemical.

During a month, 170 kgs of Material A priced at 2.10 per kg and 150 kgs of Material B priced at 6.50 per kg were actually used and the output of the chemical was 242 kgs.

Find out the material variances.

Solution
[TMCV = − 117.16; TMPV = − 92; TMUV/TMQV = − 25.16; TMMV = + 45.12 ;
TMYV/TMSUV = − 70.28; ]

# Problem 7

The Standard cost of a certain chemical mixture is : 40% material A @ 2,500 per tonne; 60% material B @ 4,200 per tonne. A standard loss of 10% is expected in production. During a period of one month 190 tonnes of material A @ 2,400 per tonne and 310 tonnes of material B @ 4,350 per tonne were used to produce 414 tonnes of good production
Calculate all possible material variances.

Solution
[TMCV = − 1,85,300; TMPV = − 27,500;TMUV/TMQV = − 1,57,800; TMMV = − 17,000;
TMYV/TMSUV = − 1,40,800; ]

# Problem 8

The standard cost of a certain chemical mixture is:

35% Material A at 105 per kg
65% Material B at 136 per kg.

A standard loss of 5% is expected in production.

During a period there is used:

125 Kg of Material A at 127 per kg. and
275 kg. of Material B at 124 per kg.

The actual output was 342 kgs
Calculate Material Variances.

Solution
[TMCV = − 4,921; TMPV = + 550; TMUV/TMQV = − 5,471; TMMV = − 465 ;
TMYV/TMSUV = − 5,006;]

# Problem 9

The standard mix of product is:

X = 75 units at 15 paise per unit
Y = 80 units at 20 paise per unit
Z = 125 units at 20 paise per unit

Ten units of finished product should be obtained from the above mix. During the month of February, ten mixes were completed and the consumption was:

X = 660 units at 20 paise per unit
Y = 975 units at 15 paise per unit
Z = 885 units at 30 paise per unit

Actual output was 85 units
Calculate Material Variances.

Solution
[TMCV = − 99.63; TMPV = − 72.75; TMUV/TMQV = − 26.88; TMMV = − 0.75 ;
TMYV/TMSUV = − 26.13;]

# Problem 10

Standard Mix of Product YN is:

lbs Materials Price per lb
50 X 24
20 Y 20
30 Z 40

The standard loss in production is 10% of input. There is no scrap value. Actual production for a period was 7,290 lbs. of YN from 80 mixes. Actual purchases and consumption of material during the month were:

lbs Materials Price per lb
4,160 X 27.50
1,680 Y 18.75
2,560 Z 42.50
You are required to calculate and present the following variances:

Solution
[TMCV = − 27,900; TMPV = − 18,860; TMUV/TMQV = − 9,040; TMMV = − 640 ;
TMYV/TMSUV = − 8,400; ]

# Problem 11

A company manufactures a particular product the standard direct materials cost of which is 10 per unit. The following information is obtained from the costing records.

Standard Mix
Material Quantity Rate Amount
Units /unit
A 70 10 700
B 30 15 450
100   1,150
Loss: (15%) 15
85   1,150

Actual results for a period:
Material Quantity Rate Amount
Units /unit
A 400 11 4,400
B 200 16 3,200
600   7,600
Loss: (10%) 60
540   7,600

Compute all the material variances

Solution
[TMCV = − 294.12; TMPV = − 600; TMUV/TMQV = + 305.88; TMMV = − 100 ;
TMYV/TMSUV = + 405.88; ]

# Problem 12

The standard material inputs required for 1,000 kgs of a finished product are given below:

Material Quantity
(in Kg.)
Standard Rate per kg
(in )
P 425 22
Q 450 44
R 225 56
Gross Input 1,100
Less: Standard loss   100
Standard output 1,000

Actual production in a period was 20,000 kgs. Of the finished product for which the actual quantities of material used and the prices paid thereof are as under:

Material Quantity Used
(in Kg.)
Purchase Price per kg
(in )
P 9,700 19
Q 8,600 42
R 4,800 60

Calculate the material variances.

Solution
[TMCV = + 1500; TMPV = + 27,100; TMUV/TMQV = − 25,600; TMMV = + 16,150 ;
TMYV/TMSUV = − 41,750; ]

# Problem 13

Gemini Chemical Industries provide the following information from their records:
For making 10 kgs. Of Gemco, the standard material requirement is:

Material Quantity
Kgs.
Rate per Kg
A 8 8.00
B 4 3.00

During April 1988, 1,000 kgs. of Gemco were produced. The consumption of material is as under:

Material Quantity
kgs.
Rate per Kg
A 750 7.50
B 510 3.00

Calculate all possible material variances

Solution
[TMCV = + 445; TMPV = + 375; TMUV/TMQV = + 70; TMMV = + 450 ; TMYV/TMSUV = − 380; ]

# Problem 14

A tonne of a particular standard of material 'M' is obtained from the following mixture.

330 kg. Material X @ 12 per kg
275 kg. Material Y @ 8 per kg
495 kg. Material Z @ 6 per kg

During a month, 200 tonnes of material 'M' were produced by actually using:

70 tonnes Material X @ 11/- per kg
62 tonnes Material Y @ 9/- per kg
110 tonnes Material Z @ 6.40 per kg.

Calculate Material Variances
How do the Yield, Mix and the Price factors contribute to the variation in the actual cost of chemical D over the standard cost?

Solution
[TMCV = − 2,06,000; TMPV = − 36,000; TMUV/TMQV = − 1,70,000; TMMV = + 12,600 ;
TMYV/TMSUV = − 1,82,600; ]

# Problem 15

S.V.Ltd. manufactures BXE by mixing three raw materials. For every batch of 100 kgs Of BXE, 125 kgs of raw materials are used. In February 2004, 56 batches were prepared to produce an output of 5,600 kg of BXE. The standard and actual particulars for February 2004 are as under:

Raw
Material
Standard Actual Quantity of
Raw Materials
purchased

Kg.
Mix

%
Price
Per kg
Mix

%
Price
Per kg
A 50 20 60 21 5,000
B 30 10 20 8 2,000
C 20 5 20 6 1,200

Calculate the material variances

Solution
[TMCV = − 9,600; TMPV = − 2,600; TMUV/TMQV = − 7,000; TMMV = − 7,000;TMYV/TMSUV = Nil; ]

# Problem 16

XYZ company manufactures a product ABC by mixing three raw materials. For every 100 kg. of ABC 125 kg.of raw materials are used in April 1990, there was an output of 5,600 kg. of ABC. The standard and actual particulars of April 1990 are as follows:

Materials Standard Actual
Mix

%
Price
per kg
Mix

%
Price
per kg
Raw Material I
Raw Material II
Raw Material III
50
30
20
40
20
10
60
20
20
42
16
12

Calculate all variances.

Solution
[TMCV = − 19,600; TMPV = − 5,600; TMUV/TMQV = − 14,000; TMMV = − 14,000;TMYV/TMSUV = Nil; ]

# Problem 17

X Y Ltd., manufactures of Product P, uses a standard cost system, Standard product and cost specifications for 1,000 kg. of product P are as follows:

Ingredients Quantity
inKg.
Price
per kg.
Cost
A 800 2.50 2,000
B 200 4.00 800
C 200 1.00 200
Input 1,200 3,000 = 2.50 per kg.
Output 1,000 3,000 = 3.00 per kg.

Material records indicate:

Consumption in January
A 157,000 kg.@ 2.40
B 38,000 kg.@ 4.40
C 36,000 kg.@ 1.20

Actual finished production for the month of January is 200,000 kg

Solution
[TMCV = + 12,800; TMPV = − 6,700; TMUV/TMQV = + 19,500; TMMV = − 3,000;
TMYV/TMSUV = + 22,500; ]

# Problem 18

A factory is engaged in producing a product using two grades of materials A and B mixed in the ratio of 3:2. The standard price of material A is 4 per unit and that of B 3 per unit. Normal loss in production is expected at 10%. Due to shortage of materials it was not possible to use the standard mix. However, normal loss is still expected to be 10%. The actual results were as follows:

 Material A 280 gms at 3.80 Material B 120 gms at 3.60 Actual production was 369 gms

you are required to calculate all possible material variances.

Solution
[TMCV = − 20; TMPV = − 16; TMUV/TMQV = − 4; TMMV = − 40;TMYV/TMSUV = + 36; ]

# Problem 19

A particular alloy is produced by using two types of material viz. S and B in the ratio 2:1. During processing a loss of 5% occurs. Standard material prices are:

S - 1,800 per tonne
B - 1,200 per tonne

During a particular period, for an output of 500 tonnes of Alloy, the actual consumption was:

S - 350 tonnes @ 2,000 per tonne
B - 193 tonnes @ 1,100 per tonne

You are required to calculate all possible material variances.

Solution
[TMCV = − 70,194.73; TMPV = − 50,700; TMUV/TMQV = − 19,494.73; TMMV = + 7,200;
TMYV/TMSUV = − 26,694.73; ]

# Practice Problems

Author : The Edifier