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Costing System

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maria khan
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27 views9 pages

Costing System

Uploaded by

maria khan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Standard Cost and Operating Performance Measures

Input data for green cells only

Direct Material Variances:


Actual quantity used 14,000
Actual price $ 0.60
Actual quantity purchased 18,000
Standard quantity 12,000
Standard price $ 0.50

Material price variance $ 1,800 Unfavorable


Material quantity variance 1,000 Unfavorable
Total material variance $ (2,800) Unfavorable
Direct Labor Variances:
Actual hours 4,000 Total actual cost $ 39,000
Actual rate $ 9.75 Total standard cost 36,000
Standard hours 3,600 Total variance $ (3,000)
Standard rate $ 10.00

Labor rate variance $ (1,000) Favorable


Labor efficiency variance 4,000 Unfavorable
Total labor variance $ (3,000) Unfavorable
Variable Manufacturing Overhead Variances:
Actual hours 4,000 Total actual cost $ 20,800
Actual rate $ 5.20 Total standard cost 18,000
Standard hours 3,600 Total variance $ (2,800)
Standard rate $ 5.00

Variable overhead
spending variance $ 800 Unfavorable
Variable overhead
efficiency variance 2,000 Unfavorable
Total variance $ (2,800) Unfavorable
Unfavorable

Unfavorable
1 Standard Costing system
Basis
andard Costing system
Standard Raw Material Rates UOM BOM to be developed stage w
Standard Dyes & Chemical Rates UOM BOM to be developed stage w
Sandard LOH Rate stage wise Machine Hours on each work centre

Annual expense Budget Required Department Wise Expenses


Allocation basis of Expenses for Service Cost Centre Activity based drivers
Annual Budgeted production volume Required stage wise

Cost elements
OM to be developed stage wise
OM to be developed stage wise
each work centre
Labour rate variance = (standard rate - actual rate) x actual hour worked 
r worked 
STANDARD COSTING
MATERIAL
1. Material cost variance = SP * SQ – AP * AQ
2. Material price variance = SP * AQ–AP * AQ
3. Material usage variance = SP * SQ – SP * AQ
4. Material mix variance = SP * RSQ – SP * AQ
5. Material yield variance = SP * SQ –SP * RSQ
LABOUR
1. Labour Cost variance = SR*ST – AR*AT
2. Labour Rate variance = SR*AT (paid) – AR*AT
3. Labour Efficiency variance = SR*ST – SR*AT (paid)
4. Labour mix variance = SR*RST – SR*AT(worked)
5. Labour Idle time variance = SR*AT(worked) – SR*AT (paid)
VARIABLE OVERHEADS COST VARIANCE
Variable Overheads Cost Variance = SR * ST – AR * AT
Variable Overheads Expenditure Variance = SR * AT – AR * AT
Variable Overheads Efficiency Variance = SR * ST – SR * AT
Where,
SR =Standard rate/hour Budgeted variable OH
Budgeted Hours

FIXED OVERHEADS COST VARIANCE


Fixed Overheads Cost Variance = SR*ST– AR*AT(paid)
Fixed Overheads Budgeted Variance = SR*BT – AR*AT(paid)
Fixed Overheads Efficiency Variance = SR*ST– SR*AT(worked)
Fixed Overheads Volume Variance = SR*ST – SR*BT
Fixed Overheads Capacity Variance = SR*AT(worked)– SR*RBT
Fixed Overheads Calendar Variance = SR*RBT – SR*BT

SC = Standard Cost, AC = Actual Cost


SP = Standard Price, SQ = Standard Quantity
AP = Actual Price, AQ = Actual Quantity
AY = Actual Yield, SY = Standard Yield
RSQ = Revised Standard Quantity, SR = Standard Rate,
ST = Standard Time AR = Actual Rate,
AT = Actual Time RST = Revised Standard Time,
BP = Budgeted Price, BQ = Budgeted Quantity
RBT = Revised Budgeted Time BMPU = Budgeted Margin per Unit
AMPU = Actual Margin per Unit

STANDARD COSTING
MATERIAL
Material cost variance = SC – AC = (SQ*AQ) – (AQ*AP)
Material price variance = AQ (SP – AP)
Material usage variance = SP (SQ – AQ)
Material mix variance = SP (RSQ – AQ)
Material yield variance = (AY – SY for actual input)
Standard material cost per unit of output
Material revised usage variance
(calculated instead of material yield variance) =
[standard quantity – Revised standard for
actual output quantity ] * Standard price
LABOUR
Labour Cost variance = SC – AC = (SH*SR) – (AH*AR)
Labour Rate variance = AH (SR - AR)
Labour Efficiency or time variance = SR (SH –AH)
Labour Mix or gang composition Variance = SR(RSH-AH)
Labour Idle Time Variance = Idle hours * SR
Labour Yield Variance = [Actual Output – Standard output for actual
input] X Standard labour cost/unit of output
Labour Revised Efficiency Variance
(instead of LYV) =
[Standard hours for actual output – Revised
standard hours] X Standard rate
Notes:-
1. LCV = LRV + LMV + ITV + LYV
2. LCV = LRV + LEV + ITV
3. LEV = LMV, LYV (or) LREV
OVERHEAD VARIANCE
(GENERAL FOR BOTH VARIABLE AND FIXED)
Standard overhead rate (per hour) = Budgeted Overheads
Budgeted Hours
Standard OH = Standard hrs for actual output X Standard OH rate per hour
Absorbed OH = Actual hrs X Standard OH rate per hour

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