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1、Chapter 6: Standard costing and variance analysis,Standard Costing external conditions in market; failure to source for correct suppliers Favourable: could also be source of supplies of inferior quality hence cheaper; general price decrease; manage to secure good but cheap supplies,(b) Material Usag
2、e Variance,(Std Quantity for Actual Output Actual Quantity for Actual Output) x Std Price (SQ AQ*) SP Material A(2 kg x 9 000) - 19 000 x 10 = 10 000 A Material B(1 kg x 9 000) - 10 100 x 15 = 16 500 A Adverse: careless handling of material by worker; wastage; purchase of inferior material and there
3、fore wastage; changes in methods of production. Favourable: effective better production methods to decrease wastage of materials etc. * -So evaluation is done on budgeted figures but actual situation- More comparable to actual results as condition is same- Manager also evaluated on more valid / real
4、istic results,(c) Total Material Variance,Std Material Cost for Actual Output Actual Material Cost for Actual Output SMC - AMC Material A(20 x 9 000 units) - 209 000 = 29 000 A Material B(15 x 9 000 units) - 141,400 = 6,400 A or Material Price Variance + Material Usage VarianceMaterial A= 19 000A +
5、10 000A =29 000A Material B= 10 100 F+ 16 500 A = 6 400 A,d) Labour / Wage Rate Variance,(Std Rate Actual Rate) x Actual Hours Worked (SR AR) x AH = (9 - 9.60) x 28 500 hrs = 17 100A,e) Labour Efficiency Variance,(Std Hours for Actual Output Actual Hours for Actual Output) x Std Rate (SH AH) x SR =
6、(3 hrs x 9 000) 28 500 x 9 = 13 500A Adverse: poor production scheduling; changes in quality control; changes in production method / process; new equipment / tools; inferior material; different grades of labour; improper usage of machinery,f) Total Labour Variance,Std Labour Cost for Actual Output A
7、ctual Labour Cost for Actual Output SLC - ALC = (27 x 9 000 units) - 273 600 = 30 600 A or Labour Rate Variance + Labour Efficiency Variance = 17 100 A + 13 500 A = 30 600 A,g) Variable O/H Expenditure Variance,(Budgeted Flexed Variable O/H Rate for Actual Direct Labour Hours) (Actual Variable O/H R
8、ate for Actual Direct Labour Hours) BFVO AVO = (2 x 28 500hrs) - 52 000 = 5 000F,h) Variable O/H Efficiency Variance,(Std Hours for Actual Output Actual Hours for Actual Output) x Std Variable O/H Rate (SH AH) x SR = (3 hours x 9 000) - 28 500 x 2 = 3 000A,i) Total Variable O/H Variance,Std Variable
9、 O/H Cost for Actual Output Actual Variable O/H Cost for Actual Output SVOC AVOC = (6 x 9 000 units) - 52 000 = 2 000 F or Variable O/H Expenditure Var. + Variable O/H Efficiency Var. = 5 000 F + 3 000 A = 2 000 F Variable O/H: indirect labour; indirect material; electricity; maintenancevariances du
10、e to change in these prices and how efficiently they are usedvariable o/h varies with direct labour hours, machine hours or output ut,j) Fixed O/H Expenditure,Budgeted Fixed O/H Actual Fixed O/H BFO - AFO = 120 000 - 116 000 = 4 000 F- Fixed O/H are fixed for the period in which it is incurredhence,
11、 fixed o/h does not change towards changes in level of activity over the short term - BUT other causes of changes include changes in price such as changes in salaries of supervisors / need to get additional supervisorshence uncontrollable in short term,k) Sales Margin Price Variance,(Actual Contribu
12、tion Margin p/unit Std Contribution Margin) x Actual Sales Volume (AM* SM) x AV = (22* - 20) x 9 000 units = 18 000 F * (Actual sales price Budgeted sales price) + Std Contribution Margin = (90 - 88) + 20 = 22,l) Sales Margin Volume Variance,(Actual Sales Volume Budgeted Sales Volume) x Std Contribu
13、tion Margin (AV BV) x SM = (9 000 units 10 000 units) x 20 = 20 000 A - Based on contribution margin and not sales price - Affected through competitors price and recession,m) Total Sales Margin Variance,Actual Contribution Margin Budgeted Contribution MarginACM BCM = 198 000* - 200 000* = 2 000A * A
14、ctual Sales Revenue Std Variable Cost for Actual Sales Volume (90 x 9 000 units) (68 x 9 000 units) = 198 000 * Budgeted Sales Revenue Budgeted Variable Cost (88 x 10 000 units) (68 x 10 000 units) = 200 000 or Sales Margin Price Var. + Sales Margin Volume Var. = 18 000 F + 20 000 A = 2 000A,6) Reco
15、nciling Budgeted Profit & Actual Profit through Std Variable / Marginal Costing System, Budgeted net profit 80 000 Total Sales variances: Sales margin price 18 000 F Sales margin volume 20 000 A 2 000 A Total Direct cost variances: Material: Price 8 900 A Usage 26 500 A 35 400 A Labour: Rate 17 100
16、A Efficiency 13 500 A 30 600 A Total Manufacturing overhead variances: Fixed overhead expenditure 4 000 F Variable o/h expenditure 5 000 F Variable o/h efficiency 3 000 A 6 000 F 62 000 A Actual profit 18 000,17.10a,Standard absorption costing 1. For financial accounting (stock valuation) fixed overheads must be allocated to products.This results in a volume variance. 2. Fixed overhead rate = budgeted fixed overhead = 12 per unit budgeted activity
