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STANDARD COSTING

1. Stick-well Ltd. is operating a standard costing technique. Standards for one batch revealed the
following data :
Material Quantity Price Total Cost
(Kgs.) (Rs.) (Rs.)
In a particular
A 30 4.0 120
B 25 2.4 60 period, when six
C 45 4.0 180 batches were
Input 100
Loss 10 produced, records
Output 90 360 revealed the
following data :
Material Quantity Price Total Cost
(Kgs.) (Rs.) (Rs.)
A 180 4.5 810
B 160 3.0 480
C 260 3.0 780
Input 600
Loss 150
Output 450 2,070

Compute material variances to management to locate the responsibility centers and

to take corrective actions.

2. In a Manufacturing process, the following standards apply :

Standard Price : Raw Material A Re, 1 per Kg.
: Raw material B Rs. 5 per kg.
Standard Mix : 75% A : 25% B (by Weight)
Standard Yield : Weight of product as % of weight of raw
material : 90%
In a period, the actual cost, usage and output were as follows :
Input : 5000 kgs. of A, costing Rs. 4,650/-
: 1600 kgs. of B, costing Rs. 7,850/-

Calculate the variances that emerge.

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STANDARD COSTING

3. The standard material cost for 100 kgs. of chemical D is made up of :

Chemical A - 30 kgs. at Rs. 4 per kg.
B - 40 Kgs. at Rs. 5 per kg
C - 80 kgs. at Rs. 6 per Kg.
In a batch, 500 kgs. of chemical D were produced from a mix of :
A - 140 Kgs. at Rs. 4.5 per kg
B - 220 Kgs. at Rs. 4.0 per Kg.
C- 440 Kgs. at Rs. 7.0 per Kg.
Calculate the material variances in the actual cost per 100 kgs. of chemical D over the standard cost.

4. From the following details, compute Labour cost variances.

Standard Data (500 units ) Actual Data (600 Units)

Type Hours Rate Total Hours Rate Total
Cost Cost
Skilled 300 3.0 900.0 248 4.0 992.0
Men
Skilled 120 2.0 240.0 93 1.5 139.5
Women
Unskilled 180 1.0 180.0 279 1.0 279.0
600 1,320.0 620 1,410.5

5. 100 skilled workmen, 40 semi-skilled workmen and 60 unskilled workmen were to work for 30
weeks to get a contract job complete. The standard weekly wages were Rs. 60, Rs. 36, and Rs.
24 respectively. The job was actually completed in 32 weeks by 80 skilled, 50 semi-skilled and
70 unskilled workmen who were paid Rs. 65, Rs. 40 and Rs. 20 respectively as weekly wages.
Find out the Labour variance.

6. X Ltd. manufactures product X that requires 2 hours of skilled men, 3 hours of semi-skilled
men and 5 hours of unskilled men, per unit at Rs. 5, 3 & 2 per hour respectively. During April
2004, the production department reported output of 5000 units of product X. The Labour cost
incurred was a detailed below :

Type of Labour Hours paid for Rate per hour

Skilled Men 9,000 Rs. 7.00
Semi-skilled Men 17,000 Rs. 2.75
Unskilled Men 30,000 Rs. 1.50
56,000

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The total hours paid for included 1000 idle hours due to machine break down etc.,
out of which 500 hours pertained to skilled men, 400 hour pertained to semiskilled
men and the balance to unskilled men.

Required :
1. Calculate the Labour cost variances.
2. Recalculate the Labour Cost variance, if the break up of 1000 idle hours is not given.
7. From the following information about sales, calculate all sales variances.
Standard Actual
Product
Units S.P. Total Rs. Units S.P. Total Rs.
A 5,000 5 25,000 6,000 6 36,000
B 4,000 6 24,000 5,000 5 25,000
C 3,000 7 21,000 4,000 8 32,000
12,000 70,000 15,000 93,000

8. X. Ltd. Operates a budgetary control and standard costing system. From the following data
calculate sales variances.
Products Budget Actual
Units Sales Value Units Sales Value
(Rs.) (Rs.)
A 100 1,200 100 1,100
B 50 600 50 600
C 100 900 200 1,700
D 75 450 50 300
325 3,150 400 3,700

9. X Co. Ltd. had budgeted following sales for the year 2006 and as against that the actual for
October 2006 were as follows :
Standard Actual
Product Units S.P. Total Rs. Units S.P. Total Rs.
A 18,000 5 90,000 17,000 4 68,000
B 30,000 7 2,10,000 28,000 6 1,68,000
C 6,000 4 24,000 9,000 5 45,000
54,000 3,24,000 54,000 2,81,000

Compute the sales variance that emerge.

10. Modern Toys Ltd. had budgeted the following sales for a month :

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Toy A 900 units at Rs. 50 per unit.

Toy B 600 units at Rs. 100 per unit.
Toy C 1500 units at Rs. 75 per unit
As against this, the actual sales were :
Toy A 1000 units at Rs. 55 per unit
Toy B 700 units at Rs. 95 per unit
Toy C 1100 units at Rs. 78 per unit

The standard costs per unit of A B & C were Rs. 45 85 and Rs. 65 respectively, where as the actual
per unit were Rs. 50, Rs. 80 & Rs. 70 respectively.

Compute different variances to explain the difference between the budgeted and actual profit and
sales.

11. Trident Toys Ltd. had drawn up the following sales budget for November, 2006

Bravo Toys 5,000 units at Rs. 100 each

Champion Toys 4,000 units at Rs. 200 each
Super Toys 6,000 units at Rs. 180 each.
The actual sales for November, 2006 were :
Bravo Toys 5,750 units at Rs. 120 each
Champion Toys 4,850 units at Rs. 180 each
Super Toys 5,000 units at Rs. 165 each.

The standard cost per unit Bravo, Champion and Super Toys were Rs. 90 : Rs. 170 and Rs. 130
respectively and actual cost per unit were Rs. 92 Rs. 168 and Rs. 135 respectively.

Calculate Profit & Sales Variances :

12. Following information is available from the books of EX. Ltd.

Standard Actual
Days 25 27
Hours 5,000 5,500
Units 2,500 2,550
Overheads 50,000 55,000
Idle Hours -- 200

Your are required to compute fixed overheads variances.

13. In department A, the following data is submitted for the week ended 31st October :

Standard Output for 40 hours per week 1,400 units

Standard fixed overhead Rs. 1,400/-
Actual output 1,200 units
Actual hours worked 32
Actual fixed overhead Rs. 1,500/-

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STANDARD COSTING

14. Vinay Ltd. has furnished you the following information for the month of August, 2006 :
Budget Actual
Output (Units) 30,000 32,500
Hours 30,000 33,000
Fixed overheads Rs. 45,000 50,000
Variable overheads Rs. 60, 000 68,000
Working days 25 26

Calculate the variance.

15. Figure out overheads cost, budget, volume, efficiency and capacity variance from the following
data

Actual hours taken for production 4,130

Budgeted overheads for 4000 hours Rs. 8,000
Overhead recovered on standard hour basis Rs. 8,130
Actual overheads incurred Rs. 8,044

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