CHAPTER 8 STANDARD COSTING & VARIANCE ANALYIS
Exercise 11. Determine the material purchase price and quantity variances. Material price variance:
100,000 × P2.50 = P250,000 100,000 × P2.60 = 260,000
P 10,000 F Material quantity variance:
95,625 × P2.60 = P248,625 89,250 × P2.60 = 232,050
P 16,575 U 2. Determine the labor rate and efficiency variances.
Labor rate variance:
122,400 × P8.35 = P1,022,040 122,400 × P8.50 = 1,040,400
P 18,360 F Labor efficiency variance:
122,400 × P8.50 = P1,040,400 127,500 × P8.50 = 1,083,750
P 43,350 F Exercise 2
1. Two variance method
Actual (P6,400 + P17,500) P23,900 Budget Variance: P240 U BFOH (8,900 × P1.90) P16,910 VOH (1,800 × 5 × P.75) 6,750 P23,660 Volume Variance: P190 F Applied OH: (1,800 × 5 × P2.65) P23,850
2. Three variance method
Actual P23,900
Spending Variance: P315 U
Flexible Budget Based on Actual Input BFOH P16,910
VOH (8,900 × P.75) 6,675 P23,585
Efficiency Variance: P75 F
Flexible Budget Based on Standard DLHs BFOH P16,910
VOH (1,800 × 5 × P.75) 6,750 P23,660
Volume Variance: P190 F
Applied OH:
3. Four variance method
Actual VOH P6,400
Variable Spending Variance: P275 F
Flex. Bud. Based on Actual
Input Hours (8,900 × P.75) P6,675
Variable Efficiency Variance: P75 F
Applied VOH
(1,800 × 5 × P.75) P6,750
Actual FOH P17,500
FOH Spending Variance: P590 U
BUDGETED FOH P16,910
FOH Volume Variance: P190 F
Applied FOH
(1,800 × 5 × P1.90) P17,100
Exercise 3
a. actual material cost P314,000
actual pieces at standard cost (80,000 × P4) 320,000
material purchase price variance P 6,000 F
b. 3,900 units × 20 pieces per unit = 78,000 standard quantity allowed c. total standard cost of material (78,000 × P4) P312,000
d. standard cost of actual material used
P312,000 + P6,400 U quantity variance P318,400
P318,400 P4 = 79,600 actual pieces used
e. actual labor cost P40,120
5,900 actual direct labor hours × P6 35,400
labor rate variance P 4,720 U
f. 3,900 units × 1.5 standard hours per unit 5,850 SHA
g. 5,850 Std Hours Allowed × P6 P35,100
h. actual hours × standard rate (from e) P35,400
standard cost of labor allowed (from g) 35,100
labor efficiency variance P 300 U
i. actual machine hours × standard VOH rate (18,900 × P2.50) P47,250
VOH spending variance 50 U
actual VOH P47,300
j. 3,900 units × 4.8 standard hours per unit = 18,720 MH allowed k. standard hours allowed (from j) × standard VOH rate
(18,720 × P2.50) P46,800
actual machine hours × standard rate (from i)
(18,900 × P2.50) 47,250
l. 19,000 machine hours × P3 P57,000 m. 3,900 units × 4.8 hours per unit × P3.00 P56,160
n. actual fixed overhead P60,000
budgeted fixed overhead (from l) 57,000
fixed overhead spending variance P 3,000 U
o. budgeted fixed overhead (from l) P57,000
applied fixed overhead (from m) 56,160
volume variance P 840 U
p. total actual overhead P107,300
[P60,000 + P47,300 (from i)]
total applied overhead (18,720 SHA × P5.50) 102,960
Total overhead variance P 4,340 U
Exercise 4
a. Total direct material cost variance.
= Actual direct material cost – Standard direct material cost
= (1,900 lbs x P41) – (8,000 x 0.25 x P40) ; = P77,900 - P80,000 ; = P2,100 favorable b. Direct material price variance.
= (AP – SP) x AQ ; = (P41 - P40) x 1,900 lbs = P1,900 unfavorable c. Direct material quantity variance.
= (AQ – SQ) x SP; = [1,900 lbs - (8,000 x 0.25)] x P40 = P4,000 favorable d. Total direct labor cost variance.
= Actual direct labor cost – Standard direct labor cost
= (250 x P18.25) – (8,000 x 0.03 x P18) ; = P4,562.50 - P4,320.00 = P242.50 unfavorable e. Direct labor rate variance.
= (AR – SR) x AH ; = (P18.25 - P18.00) x 250 = P62.50 unfavorable f. Direct labor efficiency variance.
= (AH – SH) x SR ; = [250 - (8,000 x 0.03)] x P18 = P180.00 unfavorable
Exercise 5
a. Master Flexible Actual
Budget Budget Results
Sales volume (in units) 30,000 25,000 25,000
Sales revenues P3,600,000 P3,000,000 P3,000,000
Flexible (variable) costs 2,160,000 P1,800,000 1,930,000
Contribution margin 1,440,000 P1,200,000 1,070,000
Capacity-related (fixed) costs 900,000 P 900,000 970,000
Operating profit P 540,000 P 300,000 P 100,000
b. Determine the flexible (variable) cost variance.
c. Determine the flexible (variable) planning variance.
= Flexible budget cost – Master budget cost ; = P1,800,000 – P2,160,000 = P360,000 less than planned d. As these results suggest, the manager should not be congratulated for keeping costs under control. Flexible (variable) costs were P130,000 over budget for actual output and capacity-related (fixed) costs were also P70,000 over budget. These variances from the flexible budget highlight the amounts that are different than planned. Since variances simply signal a deviation from what was planned, these differences need to be investigated before corrective actions can be taken.
Exercise 6
MATERIAL QUANTITY VARIANCE
A (181,000 – 172,200) × P0.06 = P 528 UNF B (33,000 – 28,700) × P0.12 = 516 UNF C (6,000 – 4,100) × P0.25 = 475 UNF
P1,519
Act Q x Act Mix x Std P Act Q x Std Mix x Std P Act Q x Std Mix x Std P
A 181,000 × P0.06 = P10,860 184,800 × P0.06 = P11,076 172,200 × P0.06 = P10,332 B 33,000 × P0.12 = 3,960 30,800 × P0.12 = 3,696 28,700 × P0.12 = 3,444 C 6,000 × P0.25 = 1,500 4,400 × P0.25 = 1,100 4,100 × P0.25 = 1,025
P16,320 P15,872 P14,801
MIX VARIANCE = P 436 UNF YIELD VARIANCE = P1,083 UNF
Total P1,519 UNF
Exercise 7
(AH x AM X SR) x (AH x SM x SR ) x (SH x SM x SR ) MIX VARIANCE YIELD VARIANCE
A 5,400 × P4 = P21,600 6,000 × P4 = P24,000 5,880 × P4 = P23,520 B 3,200 × P6 = 19,200 3,000 × P6 = 18,000 2,940 × P6 = 17,640 C 1,300 × P8 = 10,400 1,000 × P8 = 8,000 980 × P8 = 7,840
D 100 × P10 = 1,000 P50,000 P49,000
P52,200 MIX VARIANCE = P2,200 UNF YIELD VARIANCE = P1,000 UNF
Exercise 8
TOTAL COST EQUATION = P80,000 FIXED + P20,000 / 10,000 = P2 variable per dlh a. 120% = P80,000 + (12,000 × P2) = P104,000
100% = P80,000 + (10,000 × P2) = P100,000 80% = P80,000 + ( 8,000 × P2) = P 96,000 60% = P80,000 + ( 6,000 × P2) = P 92,000
APPLICATION RATE = P100,000 / 10,000 dlh = P10 per dlh
Volume variance = fixed oh rate x difference in normal or planned and actual units produced. P80,000 / 10,000 = P8 per dlh
. 120% = (12,000 – 10,000 = 2,000 × P8) = P16,000 100% = (10,000 – 10,000 = 0 × P8) = P0
80% = ( 8,000 – 10,000 = -2,000 × P8) = - P 16,000 60% =( 6,000 – 10,000 = - 4,000 × P8) = - P 32,000 b. BUDGET VARIANCE = ACTUAL FOH – BUDGETED FOH
P9,000 FAV = P87,000 – P96,000
Exercise 9
1. Applied rate = P6/dlh
Total Overhead Cost = P50,000 + P1/dlh Std Overhead (A) 5,000 × 2 = 10,000 (B) 5,000 × 4 = 20,000 Std Hrs. 5,000 × 2 = 10,000 2. a. 1. (P7.20 – P7.00) × 12,000 = P2,400 U 2. (P3.90 – P4.00) × 20,000 = 2,000 F P 400 U b. 1. (10,500 – 10,000) × P7.00 = P3,500 U 2. (19,800 – 20,000) × P4.00 = 800 F P2,700 U c. P79,380 – (9,800 × P8) = P980 U d. (9,800 – 10,000) × P8 = P1600 F e. (10,000 – 10,000) × P5 = 0 f. (9,800 – 10,000) × P1 = P200 F g. Fix Spd P48,100 – P50,000 = P1,900 F Var Spd P21,000 – (9,800 × P1) = P11,200 U
Exercise 10 STD Q A 120,000 × 3 = 360 1,000 B 120 × 6 = 720 C 120 × 9 = 1,080 ACT HRS ACT HRS STD HRS
ACT MIX STD MIX STD MIX
STD P STD P STD P
MIX VARIANCE YIELD VARIANCE
A 390 × P4.50 = P1,755 390 × P4.50 = P1,755 360 × P4.50 = P1,620 B 980 × P4.00 = P3,920 780 × P4.00 = P3,120 720 × P4.00 = P2,880 C 970 × P3.00 = P2,910 1,170 × P3.00 = P3,510 1,080 × P3.00 = P3,240
P8,585 P8,385 P7,740
P200 UNF P645 UNF Test I MULTIPLE CHOICE
1 D 13 C 25 C 37 A 2 B 14 A 26 B 38 B 3 D 15 B 27 A 39 A 4 A 16 B 28 C 40 A 5 D 17 C 29 B 41 B 6 C 18 C 30 A 42 D 7 B 19 A 31 D 8 A 20 B 32 A 9 C 21 A 33 C 10 C 22 D 34 A 11 B 23 B 35 B 12 A 24 C 36 A
Test II MULTIPLE CHOICE
1 A 13 D 25 B 2 D 14 B 26 D 3 C 15 C 27 D 4 D 16 D 28 B 5 D 17 D 29 D 6 D 18 C 30 D 7 A 19 B 31 C 8 B 20 C 9 A 21 B 10 C 22 D 11 C 23 C 12 D 24 A
