VARIANCES ANALYSIS – EXERCIES

Material Variances

For the same level of std. And actual outputs, the following are figures
relating to the inputs X, Y and Z. calculate variances

Inputs Standard Actual

Qty. Kg Unit Total Qty. Kg Unit Total
Price Price
Rs. Rs. Rs. Rs.
X 12 5 60 11 5 55
Y 8 8 64 9 9 81
Z 30 2 60 32 2.50 80
50 184 52 216
Less Loss 4 - 16 -
46 184 36 216
 (Material Mix Variance)
1) M.P.V = (S. P – A.P) AQ 4) MMV = (Revd. Std. Propn. – A. Propn) SP
12
X X 52  12.4
X = NIL Revd. Std. Propn 50
Y = ( 8 – 9 ) 9 = 9 (Ad) 8
Y X 52  8.3
50
Z = ( 2 – 2.50 ) 32 = 16 (Ad)
30
Z X 52  31.3
50
Total 25 (Ad)
2) MEV = (SQ – AQ) SP
X = (12 -11) 5 = 5 (F) MMV = X (12.4 – 11 ) 5 = 7 (F)
Y= (8 -9) 8 = 8 (A) Y (8.3 – 9) 8 = 5.60 (A)
Z = (30 – 32) 2 = 4 (A) Z (31.3 – 32) 2 = 1.40 (A)
Total 7 (A) Total 0
3) Cost variance = (SC – AC) 5) M.Y.V. = (A.L on AI - SL Loss on
X = 60 – 55 = 5 (F) A.Q) AV. Std. P
Y = 64 – 81 = 17 (A) =(Std. YXon46A.I 184 AV. Std P
– A.Y)
(52/50 - 36)
46
Z = 60 – 80 = 20 (A)
Total 32 (A)
M.S.U V
(SP-RSP) SQ
12X52/50=12.4
8x52/50=8.3
X = (12 – 12.4) 5 = 2 (A)
Y = (8 – 8.3) 8 = 2.40 (A)
Z = (30 – 31.3) 2 = 2.60 (A)
Total 7 (A)
Inter Checks
1) MPV + MEV = MCV
25A + 7 A = 32 A
2) MMV + MSUV: MUV/EV
0 + 7A = 7 A
Labour Variances

Calculate labours variances from following

Sta. Wages : Grade X - 90 workers @ Rs.2.ph

Grade Y 60 workers @ Rs.3 ph

Actual Wages X – 80 workers @ Rs.2.50 ph

Y – 70 workers @ Rs.2.00 ph

Budgeted hours 1000. Actual hours 900

Budgeted g.p 5000 units. – Std. Loss 20%. Actual Loss 900
units.
1) LCV =(S.C for A.P – A.C.) 3) LEV = (Std. LH – ALH ) SR
= Std. Cost pu  90000  
 X 4100  -  80X 900  2  40500 (F)
X 90 X 1000 X 2 = 180000
X=  4000  
Y 60 X 1000 X 3 = 180000  60000   4500(A)
 X4100  -  7000X 900  
Total 360000  4000   36000 (F)
Y=
Budgeted output = 5000 -20% = 4000
4) LMV = (Revd Std. mix – AM) SR
Std. rate pu = 360000 = Rs 90 Revd Sta. mix
4000
90 X 1000
Actual labour cost X X (72000  63000)  81000
X 80 X 909 X 2.50 = 180000 306000 150000
Y 70 X 900 X 2.00 = 126000 60 X 1000
Y X 135000  54000
LCV = 4100 X 90) – 306000 = 63000F 150000
2) LRV = (SR – AR ) AT LMV=X =(81000 -72000)2 = 18000 (F)
X = (2 – 2.50) (80 X 900) = 36000 (A) Y =(54000 – 63000)3 = 27000(A)
Y = (3 – 2) (70 X 900) = 63000 (F)
Total 9000
total 27000
(F)
(A)
5) LYV = (Std. output for actual mix – Actual output) X SCPU
Std. Cost Pu = Rs. 90

Std. output for actual mix

Std. output
 X A. MIX
Std. mix
4000
 X 135000  3600 unit
150000
YV = (3600 – 4100) 90 = 5000 (F)

Inter Checks
LCV = VRV + LEV – (I)
63000 (F) = 27000(F)+ 36000 (F)
LEE LMV + LYV – (I)
36000(F) = 9000 (A) + 45000 (F)
Budg same as stnd Overhead Variances
Budgeted hrs. for March 2000 – 180 hrs 2) O.H. Budget Variance/Exp.
Std. rate of articles ph =50 units/hr Variance
Budgeted overheads – Rs. 2700 = Budgeted oh – Actual oh
Actual prod – March 2000 – 9200 units = 2700 – 2800 = 100 (A)
Actual hrs. for prodn. = 175 hrs.
Actual fixed overhead = Rs. 2800
3) Overhead volume variance using
Calculate overhead variances
per unit rate
= (Actual Prodn – Std. Prodn) X
Std. rate per unit
1) O.H CV = Std. of cost of actual = (9200 – 9000) X 0.30= 60 (F)
output – actual oh. cost Using ph. rate 180 x 50
= (Std. oh pu. X Actual output) – A OH (Std. hrs for actual prodn–B.H) SR ph
 2700 
 X 9200 - 2800  40 A  9200  2700
 50 X 180   - 180 X  60 (F)
0.30 stnd overhead rate  50  180
4) Overhead efficiency variance 5) O.H. Capacity Variances

a) Using std. rate p. unit a) Using std. rate p.u

(Actual prodn – std. prodn in actual hrs) (Std. Qty or prodn – Budgeted
SR pu Qty/prodn) SR pu

= {9200 – (175 x 50)} X 0.30 = 135 (F) = (175 X 50) – (180 x 50) 0.30

b Using Std. rate ph = (8750 - 9000) 30 = 75 (A)

(Actual hrs – Std. hrs for actual prodn) SR ph
= {9200 – (175 x 50)} X 0.30 = 135 (F) b Using Std. rate ph

 9200   2700  (A HRS – B HRS ) SR PH =

 175    5 X 15 = 75 (A)
 50   180 
Check : OEV + OCV = OHVV
9 x 15 = 135 (F)
135 (F) + 75 (A) = 60 (F)
 Sales Variances
Product Budget Actual
Qty. S.P. Ph Sales Qty. S.P. Ph Sales
Units Rs. Rs Rs.
A 8000 12 96000 9000 11 99000
B 12000 9 108000 6000 10 60000
20000 204000 15000 159000
Calculate Sales Variances
1) Sales Value/Revenue Variance
= Budgeted Sales – Actual Sales
= 204000 – 159000 = 45000 (A)

2) Sales Price Variance

= AQ (SP – AP)
A = 9000 (12 – 11) = 9000 (A)
B = 6000 (9 – 10) = 6000 (F)
Total 3000 (A)
 3) Sales Volume Variance 4) Sales Mix Variance

= SP X (BQ – AQ) = (Revd SQ – AQ) SP

A = 12 X (8000 – 9000 ) 12000 (F)  8000
 
 
X 15000  - 9000  12  36000 (F)
A
 20000  
B = 9 X 12000 – 6000) 54000 (A)
 12000  
Total 42000 (A) B  X 15000  - 6000  9  27000 (A)
 20000  
Total 9000 (F)
Varity
1) Sales P.V. + SALES Volume V + S. Volume 5) Sales Qty. Variance
3000 (A) + 42000 (A) + 45000 (A) SQV = B. Sales Revd Std. Sales
Varity
A = 96000 – 72000 = 24000 (A)
2) Sales Volume V
B = 108000 – 81000 = 27000 (A)
= Sales Ma V + Sales Qty. V
Total 51000 (A)
= 43000 (A) = 9000 (F) + 51000
(A)
 Sales Variances Based on Profit
Product Budgeted Sales Actual Sales Budgeted & Actual
Qty. P. Ph Volume Qty. Price Volum Costs Ph
Rs. Rs. Rs. e Rs.
A 200 4 800 150 3 450 A – Rs. 2.50
B 300 3 900 250 3 750 B – Rs. 2.50
C 500 0.60 300 600 1 600 C – Rs. 0.50
2000 1800
MV + Qty. V = Vol V Calculate Sales Variance Based on Profit

Statement of Sales
Product Std. Sales Revd. Sta. Sales
S Qty. S. Price Value % in Budget Value in SD
A 150 4 600 40% 684
B 250 3 750 45% 769.50
C 600 0.60 360 15% 356.50
1710 1710
 Statement of Profit

Product Actual Std Budgeted

A (0.50) 150 =75 (1.50) 150 = 225 200 X 1.52 = 300
B (0.50) 250 = 125 125 300 X 050 = 150
C (0.50) 600 = 300 60 300 X 0.10 = 50
500 410 500

Revised Sto. Profit

Product Std rate of profit RSS RS. P

A 1.50/4 684 256.50
B 0.50/3 769.50 128.25
C .10/.60 256.50 42.75
627.50
 Variances
1) Value Variance = BP – AP 4) Mix V : RSP - SP
A – 300 – 75 = 225 (A) A – 256.50 – 225 = 31.50 (A)
B – 150 – 175 = 25 (A) 0 B – 128.25 – 125 = 3.25 (A) 17.50 (A)
C – 50 – 500 = 250 (F) C – 42.75 – 60 = 17.25 (F)

2) Price V = SP - AP 5) QV = BP - RSP
A – 225– 75 = 150 (A) A – 300 – 256.50 = 43.50 (A)
B – 125 – 125 = 0 (A) 90 F B – 150 – 138.25 = 21.75 (A) 72.50
C – 60 – 300 = 240 (F) (A)
C – 50 – 42.75 = 7.25 (A)

3) Volume V: BP - SP
A – 300 – 225 = 75 (A)
B – 150 – 125 = 25 (A) 90 (A)
C – 60 – 50 = 10 (F)
PV + Volume V = Value V