CHAPTER 8 STANDARD COSTING & VARIANCE ANALYIS Exercise 1 1. Determine the material purchase price and quantity variances. Material price variance: 100,000 × P2.50 = 100,000 × P2.60 = Material quantity variance: 95,625 × P2.60 = 89,250 × P2.60 =
P250,000 260,000 P 10,000 F P248,625 232,050 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) Budget Variance: BFOH (8,900 × P1.90) VOH (1,800 × 5 × P.75) Volume Variance: Applied OH: (1,800 × 5 × P2.65)
2. Three variance method Actual Spending Variance: Flexible Budget Based on Actual Input BFOH P16,910 VOH (8,900 × P.75) Efficiency Variance: Flexible Budget Based on Standard DLHs BFOH P16,910 VOH (1,800 × 5 × P.75) Volume Variance: Applied OH: (1,800 × 5 × P2.65)
P23,900 P240 U P16,910 6,750
P23,660 P190 F
P23,850
P23,900 P315 U
6,675
P23,585 P75 F
6,750
P23,660 P190 F
P23,850
3. Four variance method Actual VOH Variable Spending Variance: Flex. Bud. Based on Actual Input Hours (8,900 × P.75) Variable Efficiency Variance: Applied VOH (1,800 × 5 × P.75) Actual FOH FOH Spending Variance: BUDGETED FOH P16,910 FOH Volume Variance: Applied FOH (1,800 × 5 × P1.90)
Exercise 3 a.
P6,400 P275 F P6,675 P75 F P6,750 P17,500 P590 U
P190 F P17,100
actual material cost actual pieces at standard cost (80,000 × P4) material purchase price variance
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 P4 = 79,600 actual pieces used
P314,000 320,000 P 6,000 F
P318,400
e.
actual labor cost 5,900 actual direct labor hours × P6 labor rate variance
P40,120 35,400 P 4,720 U
f.
3,900 units × 1.5 standard hours per unit
g.
5,850 Std Hours Allowed × P6
P35,100
h.
actual hours × standard rate (from e) standard cost of labor allowed (from g) labor efficiency variance
P35,400 35,100 P 300 U
i.
actual machine hours × standard VOH rate (18,900 × P2.50) VOH spending variance actual VOH
P47,250 50 U 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) actual machine hours × standard rate (from i) (18,900 × P2.50) variable overhead efficiency variance
5,850 SHA
P46,800 47,250 P 450 U
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 budgeted fixed overhead (from l) fixed overhead spending variance
P60,000 57,000 P 3,000 U
o.
budgeted fixed overhead (from l) applied fixed overhead (from m) volume variance
P57,000 56,160 P 840 U
p.
total actual overhead [P60,000 + P47,300 (from i)] total applied overhead (18,720 SHA × P5.50) Total overhead variance
P107,300 102,960 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
e.
f.
Direct labor rate variance. = (AR – SR) x AH ; = (P18.25 - P18.00) x 250
Sales volume (in units) Sales revenues Flexible (variable) costs Contribution margin Capacity-related (fixed) costs Operating profit b.
= P62.50 unfavorable
Direct labor efficiency variance. = (AH – SH) x SR ; = [250 - (8,000 x 0.03)] x P18
Exercise 5 a.
Master Budget 30,000 P3,600,000 2,160,000 1,440,000 900,000 P 540,000
= P242.50 unfavorable
= P180.00 unfavorable
Flexible Budget 25,000 P3,000,000 P1,800,000 P1,200,000 P 900,000 P 300,000
Determine the flexible (variable) cost variance. = Actual cost – Flexible budget cost ; = P1,930,000 - P1,800,000 = P130,000 unfavorable
Actual Results 25,000 P3,000,000 1,930,000 1,070,000 970,000 P 100,000
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 B C
(181,000 – 172,200) × P0.06 = (33,000 – 28,700) × P0.12 = (6,000 – 4,100) × P0.25 =
P 528 UNF 516 UNF 475 UNF P1,519
Act Q x Act Mix x Std P Std Mix x Std P A 181,000 × P0.06 = B 33,000 × P0.12 = C 6,000 × P0.25 =
MIX VARIANCE = YIELD VARIANCE = Total
P10,860 3,960 1,500 P16,320
Act Q x Std Mix x Std P
184,800 × P0.06 = 30,800 × P0.12 = 4,400 × P0.25 =
P11,076 3,696 1,100 P15,872
Act Q x
172,200 × P0.06 = 28,700 × P0.12 = 4,100 × P0.25 =
P10,332 3,444 1,025 P14,801
P 436 UNF P1,083 UNF P1,519 UNF
Exercise 7 (AH x AM X SR) x MIX VARIANCE A B C D
5,400 × P4 = 3,200 × P6 = 1,300 × P8 = 100 × P10 =
MIX VARIANCE YIELD VARIANCE RATE VARIANCE
(AH x SM x SR )
x (SH x SM x SR ) YIELD VARIANCE
P21,600 6,000 × P4 = P24,000 19,200 3,000 × P6 = 18,000 10,400 1,000 × P8 = 8,000 1,000 P50,000 P52,200 = P2,200 UNF = P1,000 UNF = P 800 UNF (P53,000 – P52,200)
5,880 × P4 = 2,940 × P6 = 980 × P8 =
P23,520 17,640 7,840 P49,000
Exercise 8 TOTAL COST EQUATION = P80,000 FIXED + a.
P20,000 / 10,000 = P2 variable per dlh
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 = (12,000 – 10,000 = 2,000 × P8) = P16,000 = (10,000 – 10,000 = 0 × P8) = P0 = ( 8,000 – 10,000 = -2,000 × P8) = - P 16,000 =( 6,000 – 10,000 = - 4,000 × P8) = - P 32,000
.
120% 100% 80% 60%
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) (B) Std Hrs.
2.
5,000 × 2 = 10,000 5,000 × 4 = 20,000
5,000 × 2 = 10,000
a.
1. (P7.20 – P7.00) × 12,000 = 2. (P3.90 – P4.00) × 20,000 =
b.
1. (10,500 – 10,000) × P7.00 = 2. (19,800 – 20,000) × P4.00 =
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
P2,400 U 2,000 F P 400 U P3,500 U 800 F P2,700 U
Exercise 10 STD Q A B C
120,000 1,000 120 120
× 3 = 360 × 6 = 720 × 9 = 1,080
ACT HRS ACT MIX STD P
ACT HRS STD MIX STD P
MIX VARIANCE A B C
390 × P4.50 = 980 × P4.00 = 970 × P3.00 =
STD HRS STD MIX STD P
YIELD VARIANCE
P1,755 390 × P4.50 = P1,755 P3,920 780 × P4.00 = P3,120 P2,910 1,170 × P3.00 = P3,510 P8,585 P8,385 P200 UNF P645 UNF
360 × P4.50 = 720 × P4.00 = 1,080 × P3.00 =
Test I MULTIPLE CHOICE
1 2 3 4 5 6 7 8 9 10 11 12
D B D A D C B A C C B A
13 14 15 16 17 18 19 20 21 22 23 24
C A B B C C A B A D B C
25 26 27 28 29 30 31 32 33 34 35 36
C B A C B A D A C A B A
Test II MULTIPLE CHOICE
1 2 3 4 5 6 7 8 9 10 11 12
A D C D D D A B A C C D
13 14 15 16 17 18 19 20 21 22 23 24
D B C D D C B C B D C A
25 26 27 28 29 30 31
B D D B D D C
37 38 39 40 41 42
A B A A B D
P1,620 P2,880 P3,240 P7,740
