STANDARD COSTING

Q1. The standard and actual figures of product ‘Z’ are as under:

Standard Actual

Material quantity 50 units 45 units

Material price per unit ₹ 1.00 ₹ 0.80

CALCULATE material cost variances.

Q2. NXE Manufacturing Concern furnishes the following information:

Standard: Material for 70 kg finished products 100 kg

Price of material ₹ 1 per kg

Actual: Output 2,10,000 kg

Material used 2,80,000 kg

Cost of Materials ₹ 2,52,000

CALCULATE: (a) Material usage variance, (b) Material price variance, (c) Material cost

variance.

Q3. The standard cost of a chemical mixture is as follows:

40% material A at ₹ 20 per kg

60% material B at ₹ 30 per kg

A standard loss of 10% of input is expected in production. The cost records for a

period showed the following usage:

90 kg material A at a cost of ₹ 18 per kg

110 kg material B at a cost of ₹ 34 per kg

The quantity produced was 182 kg of good product.

CALCULATE all material variances.

Q4. Raw material ‘A’ and ‘B’ having standard cost of ₹ 20 /kg and 30/kg are mixed in the
standard ratio of 60% and 40% to manufacture ‘Z’

During a particular week 1200 kg of A costing ₹ 25000 and 1000 kgs of B costing ₹ 28000
were mixed to produce 2200 kgs of Z. calculate all material variances.
Q5. For making 10 kg. of CEMCO, the standard material requirements is:

Material Quantity (Kg.) Rate per kg. (₹)

A 8 kg 6.00

B 4 kg 4.00

During April, 1,000 kg of CEMCO were produced. The actual consumption of materials is as
under:

Material Quantity (Kg.) Rate per kg. (₹)

A 750 7.00

B 500 5.00

CALCULATE (A) Material Cost Variance; (b) Material Price Variance; (c) Material usage
Variance.

Q6. Vinak Ltd. produces an article by blending two basic raw materials. It operates a
standard costing system and the following standards have been set for raw materials:

Material Standard Mix Standard Price per kg

A 40% ₹ 4.00

B 60% ₹ 3.00

The standard loss in processing is 15%. During April, 1980, the company produced 1,700 kg of
finished output.

The position stock and purchases for the month of April, 1980 is as under:

Material Stock on 1.4.80 (kg.) Stock on 30.4.80 (kg) Purchased during April 1980

(kg.) Cost (₹)

A 35 5 800 3400

B 40 50 1200 3000

Calculate the following Variances:

(i) Material Price Variance (ii) Material Usage Variance (iii) Material Yield Variance

(iv) Material Mix Variance (v) Total Material Cost Variance.

Q7. The standard and actual figures of a firm are as under

Standard time for the job 1,000 hours

Standard rate per hour ₹ 50

Actual time taken 900 hours

Actual wages paid ₹ 36,000

CALCULATE variances.

Q8. NPX Ltd. uses standard costing system for manufacturing of its product X. Following is
the budget data given in relation to labour hours for manufacture of 1 unit of Product X :

Labour Hours Rate (₹)

Skilled 2 6

Semi-Skilled 3 4

Un- Skilled 5 3

Total 10

In the month of January, 2020, total 10,000 units were produced following are the details:

Labour Hours Rate (₹) Amount (₹)

Skilled 18,000 7 1,26,000

Semi-Skilled 33,000 3.5 1,15,500

Un- Skilled 58,000 4 2,32,000

Total 1,09,000 4,73,500

Actual Idle hours (abnormal) during the month:

Skilled: 500

Semi- Skilled: 700

Unskilled: 800

Total 2,000

CALCULATE:

(a) Labour Variances.

(b) Also show the effect on Labour Rate Variance if 5,000 hours of Skilled Labour are paid
@ ₹ 5.5 per hour and balance were paid @ ₹ 7 per hour.
Q9. A building can be constructed by engaging a gang of workers as per details given below,
for 100 working days of each hours each.

Standard data:

Skilled Semi-skilled Unskilled

No. of workers in the gang 6 8 6

Standard rate of wages/hr. ₹ 25 ₹ 20 ₹ 16

Actual completion of the work however took 104 days of eight hour each. This includes 16
hours of stoppages due to heavy rains. The actual No. of workers engaged and the actual
rates paid are given below:

Skilled Semi-skilled Unskilled

No. engaged 8 6 6

Actual rate / hr. ₹ 30 ₹ 24 ₹ 16

Calculate the following variances:

a) Labour cost variance

b) Labour rate variance

c) Labour efficiency variance

d) Labour mixed variance

e) Idle time variance

Q10. Calculate labour variances

Standard Data

Grade X 90 Labourer ₹ 2 per hour

Grade Y 60 Labourer ₹ 3 per hour

Actual Data

Grade X 80 Labourer ₹ 2.5 per hour

Grade Y 70 Labourer ₹ 2 per hour

Budgeted hours 1,000

Actual hours 900

Budgeted gross production 5,000 units

Standard loss 20%.

Actual loss 900 units.

Q11. The following standards have been set to manufacture a product :

Direct material ₹

2 units of A @ ₹ 4 per unit 8.00

3 units of B @ ₹ 3 per unit 9.00

15 units of C @ ₹ 1 per unit 15.00

32.00

Direct labour 3 hrs. @ ₹ 8 per hour 24.00

Total standard prime cost 56.00

The company manufactured and sold 6,000 units of the product during the year. Direct

material costs were as follows:

12,500 units of A at ₹ 4.40 per unit

18,000 units of B at ₹ 2.80 per unit

88,500 units of C at ₹ 1.20 per unit

The company worked 17,500 direct labour hours during the year. For 2,500 of these hours
the company paid at ₹ 12 per hour while for the remaining the wages were paid at standard
rate. Calculate materials price variances and usage variances and labour rate and efficiency
variances.

Q12. ABC Ltd. had prepared the following estimation for the month of April:

Quantity Rate (₹) Amount (₹)

Material-A 800 kg. 45.00 36,000

Material-B 600 kg. 30.00 18,000

Skilled labour 1,000 hours 37.50 37,500

Unskilled labour 800 hours 22.00 17,600

Normal loss was expected to be 10% of total input materials and an idle labour time of 5% of
expected labour hours was also estimated.
At the end of the month the following information has been collected from the cost
accounting department:

The company has produced 1,480 kg. finished product by using the followings:

Quantity Rate (₹) Amount (₹)

Material-A 900 kg. 43.00 38,700

Material-B 650 kg. 32.50 21,125

Skilled labour 1,200 hours 35.50 42,600

Unskilled labour 860 hours 23.00 19,780

CALCULATE:

a) Material Cost Variance;

b) Material Price Variance;

c) Material Mix Variance;

d) Material Yield Variance;

e) Labour Cost Variance;

f) Labour Efficiency Variance and

g) Labour Yield Variance

Q13. From the following information of G Ltd., CALCULATE (i) Variable Overhead Cost

Variance; (ii) Variable Overhead Expenditure Variance and (iii) Variable Overhead Efficiency
Variance:

Budgeted production 6,000 units

Budgeted variable overhead ₹ 1,20,000

Standard time for one unit of output 2 hours

Actual production 5,900 units

Actual overhead incurred ₹ 1,22,000

Actual hours worked 11,600 hours

Q14. The cost detail of J&G Ltd. for the month of September, 2020 is as follows:

Budgeted Actual

Fixed overhead ₹ 15,00,000 ₹ 15,60,000

Units of production 7,500 7,800

Standard time for one unit 2 hours -

Actual hours worked - 16,000 hours

Required:

CALCULATE (i) Fixed Overhead Cost Variance (ii) Fixed Overhead Expenditure

Variance (iii) Fixed Overhead Volume Variance (iv) Fixed Overhead Efficiency

Variance and (v) Fixed Overhead Capacity Variance.

Q15. The following information was obtained from the records of a manufacturing unit using
standard costing system.

Standard Actual

Production 4,000 units 3,800 units

Working days 20 21

Machine hours 8,000 hours 7,800 hours

Fixed Overhead ₹ 4,00,000 ₹ 3,90,000

Variable Overhead ₹ 1,20,000 ₹ 1,20,000

Q16. XYZ Ltd. has furnished you the following information for the month of August, 2020:

Budget Actual

Output (units) 30,000 32,500

Hours 30,000 33,000

Fixed overhead ₹ 45,000 ₹ 50,000

Variable overhead ₹ 60,000 ₹ 68,000

Working days 25 26

CALCULATE overhead variances.

Q17. The following data has been collected from the cost records of a unit for computing
the various fixed overhead variances for a period:

Number of budgeted working days 25

Budgeted man-hours per day 6,000

Output (budgeted) per man-hour (in units) 1

Fixed overhead cost as budgeted ₹ 1,50,000

Actual number of working days 27

Actual man-hours per day 6,300

Actual output per man-hour (in-units) 0.9

Actual fixed overhead incurred ₹ 1,56,000

CALCULATE fixed overhead variances:

(i) Expenditure Variance

(ii) Volume Variance,

(iii) Fixed Cost Variance.

Q18. The following information is available from the cost records of a Company for the
month of July 2016:

Materials Purchased: 22,000 pieces ₹ 90,000

Materials Consumed: 21,000 pieces

Actual Wages paid for 5,150 hours ₹ 25,750

Fixed Factory Overheads Incurred ₹ 46,000

Fixed Factory Overheads Budgeted ₹ 42,000

Units Produced 1,900 units

Standard Rates and Prices are:

Direct Material ₹ 4.50 per piece.

Standard Input 10 pieces per unit

Direct Labour Rate ₹ 6 per hour.

Standard requirement 2.5 hours per unit

Overheads ₹ 8 per Labour Hour.
You are required to calculate the following variances:

(a) Material Price Variance

(b) Material Usage Variance

(c) Labour Rate Variance

(d) Labour Efficiency Variance

(e) Fixed Overhead Expenditure Variance.

(f) Fixed Overhead Efficiency Variance

(g) Fixed Overhead Capacity Variance

Q19. SP Limited produces a product ‘Tempex’ which is sold in a 10 Kg. packet. The standard
cost card per packet of ‘Tempex’ are as follows:

Direct materials 10 kg @ Rs. 45 per kg 450

Direct labour 8 hours @ Rs. 50 per hour 400

Variable Overhead 8 hours @ Rs. 10 per hour 80

Fixed Overhead 200

Total 1,130

Budgeted output for the third quarter of a year was 10,000 Kg. Actual output is 9,000 Kg.

Actual cost for this quarter are as follows:

Direct Materials 8,900 Kg @ Rs. 46 per Kg. 4,09,400

Direct Labour 7,000 hours @ Rs. 52 per hour 3,64,000

Variable Overhead incurred 72,500

Fixed Overhead incurred 1,92,000

You are required to calculate:

(i) Material Usage Variance

(ii) Material Price Variance

(iii) Material Cost Variance

(iv) Labour Efficiency Variance

(v) Labour Rate Variance

(vi) Labour Cost Variance

(vii) Variable Overhead Cost Variance

(viii) Fixed Overhead Cost Variance.