Budgetary ControlSTANDARD COST

All rights reservedAHMAD ROSLANFaculty business management and accountancy

MATERIAL VARIANCES

A) Glacier Peak Outfitters has the following direct material standards for the fiberfill in its mountain parka

0.1 kg of fiberfill per parka at $5.00 per kg Last month, 210 kg of fiberfill were purchased and used to

make 2,000 parkas. The material cost a total of $1,029 Direct materials price. Quantity, and total spending

variances How to solve this problem?

Basis formula

ACTUAL QUANTITY (AQ)

XACTUAL PRICE (AP)

ACTUAL QUANTITY (AQ)

XSTANDARD PRICE

(SP)

STANDARD QUANTITY (SQ)

XSTANDARD PRICE

(SP)

Formula tips

ACTUAL QUANTITY X

ACTUAL PRICE

ACTUAL QUANTITYX

STANDARD PRICE

STANDARD QUANTITY

XSTANDARD PRICE

ACTUAL QUANTITY X

ACTUAL PRICE

ACTUAL QUANTITYX

STANDARD PRICE

STANDARD QUANTITY

XSTANDARD PRICE

Use this formula to calculate Materials

price variance

Use this formula to calculate Materials quantity variance

MATERIAL VARIANCES

A) Glacier Peak Outfitters has the following direct material standards for the fiberfill in its mountain parka

0.1 kg of fiberfill per parka at $5.00 per kg Last month, 210 kg of fiberfill were purchased and used to make 2,000

parkas. The material cost a total of $1,029 Material price variance: MPV = ( AQ X AP ) – (AQ X SP)

= (210 x 4.90) – (210 x 5.00)=21= FOVOURABLE OR UNFAVOURABLE?= Actual price:4.90, Standard price: 5.00=Actual is lower than standard=thus, it is favorable=$21 Favorable (F)

MATERIAL VARIANCE

A) Glacier Peak Outfitters has the following direct material standards for the fiberfill in its mountain parka

0.1 kg of fiberfill per parka at $5.00 per kg Last month, 210 kg of fiberfill were purchased and used to make 2,000

parkas. The material cost a total of $1,029 Material quantity variance: MPV = ( AQ X SP ) – (SQ X SP)

= (210 x 5.00) – (200 x 5.00)=50kg= FOVOURABLE OR UNFAVOURABLE?= Actual quantity:210, Standard quantity: 200=Actual is greater than standard=thus, it is unfavorable=50kg unfavorable (U)

MATERIAL VARIANCE

A) Hanson Inc. has the following materials standard to manufacture one zippy

1.5 pounds per Zippy at $4.00 per pound Last week, 2,800 pounds of material were purchased at a total cost of

$10,920 and 1700 pounds were used to make 1,000 Zippies Material price variance: MPV = ( AQ X AP ) – (AQ X SP)

= (1700 x 3.9) – (1700 x 4.00)=6630 - 6800=$- 170= FOVOURABLE OR UNFAVOURABLE?= Actual price:3.90, Standard price: 4.00=Actual is lower than standard, harga sebenar lebih murah=thus, it is favorable=$170 favorable (F)

MATERIAL VARIANCE

A) Hanson Inc. has the following materials standard to manufacture one zippy

1.5 pounds per Zippy at $4.00 per pound Last week, 2,800 pounds of material were purchased at a total cost of

$10,920 and 1700 pounds were used to make 1,000 Zippies Material quantity variance: MPV = ( AQ X SP ) – (SQ X SP)

= (1700 x 4.00) – (1500 x 4.00)=800 pounds = FOVOURABLE OR UNFAVOURABLE?= Actual quantity:1700, Standard quantity: 1,500=Actual is greater than standard, terlebih guna meterial =thus, it is unfavorable=800 pounds (U)

Spending Variance

Spending variance= MPV + MQV MPV=170 F MQV=800 U Therefore, Spending variance = -170F +

800U=630U

DIRECT LABOR VARIANCE

Formula? To calculate Direct labor rate

variance

To calculate Direct Labor efficiency variance

ACTUAL HOUR X

ACTUAL RATE

ACTUAL HOURX

STANDARD RATE

STANDARD HOURX

STANDARD RATE

ACTUAL HOUR X

ACTUAL RATE

ACTUAL HOURX

STANDARD RATE

STANDARD HOURX

STANDARD RATE

DIRECT LABOR VARIANCE 1. Glacier peak Outfitters has the following direct labor

standard for its mountain parka 1.2 standard hours per parka at $10.00 per hour Last month, employees actually worked 2,500 at a total

labor cost of $26,250 to make 2000 parkas Find Direct labor rate, efficiency and total spending

variances. How to solve this problem?

DIRECT LABOR VARIANCE 1. Glacier peak Outfitters has the following direct labor standard

for its mountain parka 1.2 standard hours per parka at $10.00 per hour Last month, employees actually worked 2,500 at a total labor cost

of $26,250 to make 2000 parkas DL rate variance: DL rate Variance = ( AH X AR ) – (AH X SR)

= (2500 x 10.50) – (2,500 x 10.00)=26,250 - 25000=$1,250= FOVOURABLE OR UNFAVOURABLE?= Actual Rate:10.50, Standard Rate: 10.00=Actual is greater than standard, harga labor lebih mahal =thus, it is unfavorable=$1,250 (U)

DIRECT LABOR VARIANCE 1. Glacier peak Outfitters has the following direct labor standard for

its mountain parka 1.2 standard hours per parka at $10.00 per hour Last month, employees actually worked 2,500 at a total labor cost

of $26,250 to make 2000 parkas DL efficiency variance: DL efficiency Variance = ( AH X SR ) – (SH X SR)

= (2500 x 10.00) – (( 1.2X 2000)2,400 x 10.00)=25,000 - 24000=1000 hours= FOVOURABLE OR UNFAVOURABLE?= Actual efficiency:2500, Standard efficiency: 2400=Actual is greater than standard, labor ambil masa terlalu lama(x cekap) =thus, it is unfavorable=1000 hours (U)

DIRECT LABOR VARIANCE

Spending variance= DL rate + DL efficiency

DL rate=$1250 U DL efficiency=1000 U Therefore, Spending variance = 1250U +

1000U=2250U

DIRECT LABOR VARIANCE 1. Hanson Inc, has the following direct labor standard to

manufacture one zippy 1.5 standard hours per zippy at $12.00 per hour Last week, 1,550 direct labor hours were worked at a total

labor cost of $18,910 to make 1,000 zippies Find Direct labor rate, efficiency and total spending

variances. How to solve this problem?

DIRECT LABOR VARIANCE 1. Hanson Inc, has the following direct labor standard to

manufacture one zippy 1.5 standard hours per zippy at $12.00 per hour Last week, 1,550 direct labor hours were worked at a total labor

cost of $18,910 to make 1,000 zippies DL rate variance: DL rate Variance = ( AH X AR ) – (AH X SR)

= (1550x 12.20) – (1,550 x 12.00)=18,910 – 18,600=$310= FOVOURABLE OR UNFAVOURABLE?= Actual Rate:12.20, Standard Rate: 12.00=Actual is greater than standard, harga labor lebih mahal =thus, it is unfavorable=$310 (U)

DIRECT LABOR VARIANCE 1. Hanson Inc, has the following direct labor standard to

manufacture one zippy 1.5 standard hours per zippy at $12.00 per hour Last week, 1,550 direct labor hours were worked at a total labor

cost of $18,910 to make 1,000 zippies DL efficiency variance: DL efficiency Variance = ( AH X SR ) – (SH X SR)

= (1550 x 12.00) – (( 1.5X 1000)1,500 x 12.00)=18,600 – 18,000=600 hours= FOVOURABLE OR UNFAVOURABLE?= Actual efficiency:1550, Standard efficiency: 1500=Actual is greater than standard, labor ambil masa terlalu lama(x cekap) =thus, it is unfavorable=600 hours (U)

DIRECT LABOR VARIANCE

Spending variance= DL rate + DL efficiency

DL rate=$310 U DL efficiency=600 U Therefore, Spending variance = 310 U + 600

U=910U

VARIABLE OVERHEAD VARIANCES

1. Glacier peak Outfitters has the following direct variable manufacturing overhead labor standard for its mountain parka

1.2 standard hours per parka at $4.00 per hour Last month, employees actually worked 2,500 hours to

make 2000 parkas. Actual variable manufacturing overhead for the month was $10,500

Find VOH rate, efficiency and total spending variances.

How to solve this problem?

VARIABLE OVERHEAD VARIANCES

1. Glacier peak Outfitters has the following direct variable manufacturing overhead labor standard for its mountain parka

1.2 standard hours per parka at $4.00 per hour Last month, employees actually worked 2,500 hours to make

2000 parkas. Actual variable manufacturing overhead for the month was $10,500

VOH rate variance: VOH rate Variance = ( AH X AR ) – (AH X SR)

= (2500 x 4.2) – (2,500 x 4.00)=5,115 – 4,650=$465= FOVOURABLE OR UNFAVOURABLE?= Actual Rate:4.2, Standard Rate: 4.00=Actual is greater than standard, harga labor lebih mahal =thus, it is unfavorable=$465 (U)

VARIABLE OVERHEAD VARIANCES

1. Glacier peak Outfitters has the following direct variable manufacturing overhead labor standard for its mountain parka

1.2 standard hours per parka at $4.00 per hour Last month, employees actually worked 2,500 hours to make 2000

parkas. Actual variable manufacturing overhead for the month was $10,500

VOH efficiency variance: VOH efficiency Variance = ( AH X SR ) – (SH X SR)

= (2500 x 4.00) – (( 1.2X 2000)2400 x 4.00)=10,000 – 9,600=400 hours= FOVOURABLE OR UNFAVOURABLE?= Actual efficiency:2500, Standard efficiency: 2400=Actual is greater than standard, labor ambil masa terlalu lama(x cekap) =thus, it is unfavorable=400 hours (U)

VARIABLE OVERHEAD VARIANCES

Spending variance= VOH rate + VOH efficiency

VOH rate=$500 U VOH efficiency=400 hours U Therefore, Spending variance = 500 U + 400

U=900U

VARIABLE OVERHEAD VARIANCES

B) Hanson Inc, has the following variable manufacturing overhead standard to manufacture one Zippy:

1.5 standard hours per zippy at $3.00 per direct labor hour Last week , 1,550 hours were worked to make 1,000

Zippies, and $5,115 was spent for variable manufacturing overhead.

Find VOH rate, efficiency and total spending variances.

How to solve this problem?

VARIABLE OVERHEAD VARIANCES

B) Hanson Inc, has the following variable manufacturing overhead standard to manufacture one Zippy:

1.5 standard hours per zippy at $3.00 per direct labor hour Last week , 1,550 hours were worked to make 1,000 Zippies, and

$5,115 was spent for variable manufacturing overhead VOH rate variance: VOH rate Variance = ( AH X AR ) – (AH X SR)

= (1,550 x 3.30) – (1,550 x 3.00)=5,115 – 4,650=$465= FOVOURABLE OR UNFAVOURABLE?= Actual Rate:3.30, Standard Rate: 3.00=Actual is greater than standard, harga labor lebih mahal =thus, it is unfavorable=$465 (U)

VARIABLE OVERHEAD VARIANCES

B) Hanson Inc, has the following variable manufacturing overhead standard to manufacture one Zippy:

1.5 standard hours per zippy at $3.00 per direct labor hour Last week , 1,550 hours were worked to make 1,000 Zippies,

and $5,115 was spent for variable manufacturing overhead VOH efficiency variance: VOH efficiency Variance = ( AH X SR ) – (SH X SR)

= (1550 x 3.00) – (( 1.5X 1000)1500 x 3.00)=4650 – 4500=150 hours= FOVOURABLE OR UNFAVOURABLE?= Actual efficiency:1550, Standard efficiency: 1500=Actual is greater than standard, labor ambil masa terlalu lama(x cekap) =thus, it is unfavorable=150 hours (U)

VARIABLE OVERHEAD VARIANCES

Spending variance= VOH rate + VOH efficiency

VOH rate=$465 U VOH efficiency=150 hours U Therefore, Spending variance = 465 U + 150

U=615U

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