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Assignment On SC and VA

The document provides examples of standard costing and variance analysis exercises. Exercise 1 shows how to set a standard cost for materials and create a standard cost card. Exercise 2 calculates material cost and quantity variances. Exercise 3 calculates direct labor and variable overhead spending and efficiency variances. Exercise 4 works backwards from variances to calculate actual hours and rates. Exercise 5 calculates direct labor variances. Exercise 6 calculates variable overhead variances by breaking total variance into rate and efficiency components.

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Vixen Aaron Enriquez
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263 views12 pages

Assignment On SC and VA

The document provides examples of standard costing and variance analysis exercises. Exercise 1 shows how to set a standard cost for materials and create a standard cost card. Exercise 2 calculates material cost and quantity variances. Exercise 3 calculates direct labor and variable overhead spending and efficiency variances. Exercise 4 works backwards from variances to calculate actual hours and rates. Exercise 5 calculates direct labor variances. Exercise 6 calculates variable overhead variances by breaking total variance into rate and efficiency components.

Uploaded by

Vixen Aaron Enriquez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as XLSX, PDF, TXT or read online on Scribd
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Exercises on Standard Cost and Variance Analysis

Exercise 1 (Setting Standards; Preparing a Standard Cost Card)

Requirement 1 (Standard purchase price for one gram of Beta ML12)


Cost per 2 kg container
Less: 2% cash discount
Net cost
Add: Freight cost per 2 kg container
Total cost per 2 kg container (a)
Divided by: Number of grams per container (b)
Standard cost per gram purchased (a) / (b)

Requirement 2 (Standard quantity of Beta ML12 (in grams) per capsule that passes final inspection)
Beta ML12 required per capsule as per bill of mats.
Add: Allowance for material rejected as unsuitable
Total
Add: Allowance for rejected capsules
Standard quantity of Beta ML12 per salable capsule

Requirement 3 (Standard cost card)


Item Standard Quantity per Capsule Standard Price per Gram Standard Cost per Capsule
Beta ML12 6.50 grams ₱2.99 ₱19.435
₱6,000
120
₱5,880
100 (P1,000 / 10 containers)
₱5,980
2,000 (2 kg x 1,000 grams per kg)
₱2.99

6 grams
0.25 grams (6 grams / 0.96 = 6.25 grams; 6.25 grams - 6.00 grams = 0.25 grams)
6.25 grams
0.25 grams (6.25 grams / 25 capsules)
6.50 grams
Exercise 2 (Material Variances)

Requirement 1 (Cost for wood; Greater or less the cost incurred)


Number of chopping blocks
Multiply by: Number of board feet per chopping block
Standard board feet allowed
Multiply by: Standard cost per board foot
Total standard cost

Actual cost incurred


Less: Standard cost above
Total variance - unfavorable

Requirement 2 (Breakdown of difference)


AQ x AP AQ x SP SQ x SP
₱18,700 ₱19,800 ₱18,000
11,000 BF x P1.80 per BF 10,000 BF x P1.80 per BF
Price Variance P1,100 F
Quantity Variance P1,800 U
TOTAL VARIANCE P700 U
4,000
2.5
10,000
₱1.80
₱18,000

₱18,700
₱18,000
₱700
Exercise 3 (Labor and Variable Overhead Variances)

Requirement 1 (Direct Labor Cost)


Number of units manufactured 20,000
Multiply by: Standard labor time per unit 0.4 (24 mins / 60 mins per hour - 0.
Total standard hours of labor time allowed 8,000
Multiply by: Standard direct labor rate per hour ₱6
Total standard direct labor cost ₱48,000

Actual direct labor cost ₱49,300


Less: Standard direct labor cost ₱48,000
Total variance - unfavorable ₱1,300

Requirement 2 (Breakdown of difference)


AH x AR AH x SR SH x SR
₱49,300 ₱51,000 ₱48,000
8,500 hrs x P6/hr 8,000 hrs* x P6/hr *20,000 units x 0.4 hr/unit = 8,000 hrs
Rate Variance P1,700 F
Efficiency Variance P3,000 U
TOTAL VARIANCE P1,300 U

Requirement 3 (Variable Overhead Spending and Efficiency Variances)


AH x AR AH x SR SH x SR
₱39,100 ₱34,000 ₱32,000
8,500 hrs x P4/hr 8,000 hrs x P4/hr
Spending Variance P5,100 F
Efficiency Variance P2,000 U
TOTAL VARIANCE P7,100 U
(24 mins / 60 mins per hour - 0.4 hour)
Exercise 4 (Working Backwards from Labor Variances)

Requirement 1 (Number of Actual Labor-Hours Spent)


Total Variance Rate Variance Efficiency Variance
₱330 ₱150 ₱480
Unfavorable Favorable Unfavorable

Efficiency Variance = SR (AH - SH)


P6/hr (AH - 420 hrs*) = P480 U *168 batches x 2.5 hrs/batch = 420 hrs
P6/hr x AH - P2,520 = P480** **When used with the formula, unfavorable variances are POSITIVE and favorable variances are NEGATIVE
P6/hr x AH = P3,000
AH = 500 hrs

Requirement 2 (Actual Hourly Rate Paid to Employees)


Rate Variance = AH (AR - SR)
500 hrs (AR - P6/hr) = P150 F
500 hrs x AR - P3,000 = -P150* *When used with the formula, unfavorable variances are POSITIVE while favorable variances are NEGATIV
500 hrs x AR = P2,850
AR = P5.70/hr
nd favorable variances are NEGATIVE.

hile favorable variances are NEGATIVE.


Exercise 5 (Direct Labor Variances)

Requirement 1 (Direct Labor Cost)


Number of meals prepared 6,000
Multiply by: Standard direct labor-hours per meal 0.20
Total direct labor cost per hour 1,200
Multiply by: Standard direct labor cost per hour ₱9.50
Total standard direct labor cost ₱11,400

Actual cost incurred ₱11,500


Less: Total standard direct labor cost ₱11,400
Total direct labor variance ₱100

Requirement 2 (Breakdown of Difference)


AH x AR AH x SR SH x SR
₱11,500 ₱10,925 ₱11,400
1,150 hrs x P9.50/hr 1,200 hrs x P9.50/hr
Rate Variance P575 U
Efficiency Variance P475 F
TOTAL VARIANCE P100 U
Unfavorable
Exercise 6 (Variable Overhead Variances)

Requirement 1 (Variable Overhead Cost)


Number of items shipped 140,000
Multiply by: Standard direct labor-hours per item 0.04
Total direct labor-hours allowed 5,600
Multiply by: Standard variable overhead cost per hour ₱2.80
Total standard variable overhead cost ₱15,680

Actual variable overhead cost incurred ₱15,950


Less: Total standard variable overhead cost ₱15,680
Total variable overhead variance ₱270

Requirement 2 (Breakdown of difference)


AH x AR AH x SR SH x SR
₱15,950 ₱16,240 ₱15,680
5,800 hrs x P2.80/hr 5,600 hrs x P2.80/hr
Rate Variance P290 F
Efficiency Variance P560 U
TOTAL VARIANCE P270 U
Unfavorable

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