This document provides information and formulas for calculating different types of variances, including material, direct labor, and variable overhead variances. It explains how to calculate price and quantity variances for materials, as well as rate and efficiency variances for direct labor and variable overhead. Formulas are given for each variance, and examples are worked through step-by-step to demonstrate how to calculate variances for different companies and time periods. The document aims to teach the concepts and calculations involved in variance analysis.

1. Budgetary Control STANDARD COST All rights reserved AHMAD ROSLAN Faculty business management and accountancy

2. MATERIAL VARIANCES A) Glacier Peak Outfitters has the following direct material standards for the fiberfill in its mountain parka 0.1 kg of fiberfill per parka at $5.00 per kg Last month, 210 kg of fiberfill were purchased and used to make 2,000 parkas. The material cost a total of $1,029 Direct materials price. Quantity, and total spending variances How to solve this problem?

3. Basis formula

4. Formula tips Use this formula to calculate Materialspricevariance Use this formula to calculate Materialsquantityvariance

5. MATERIAL VARIANCES A) Glacier Peak Outfitters has the following direct material standards for the fiberfill in its mountain parka 0.1 kg of fiberfill per parka at $5.00 per kg Last month, 210 kg of fiberfill were purchased and used to make 2,000 parkas. The material cost a total of $1,029 Material price variance: MPV = ( AQ X AP ) – (AQ X SP) = (210 x 4.90) – (210 x 5.00) =21 = FOVOURABLE OR UNFAVOURABLE? = Actual price:4.90, Standard price: 5.00 =Actual is lower than standard =thus, it is favorable =$21 Favorable (F)

6. MATERIAL VARIANCE A) Glacier Peak Outfitters has the following direct material standards for the fiberfill in its mountain parka 0.1 kg of fiberfill per parka at $5.00 per kg Last month, 210 kg of fiberfill were purchased and used to make 2,000 parkas. The material cost a total of $1,029 Material quantity variance: MPV = ( AQ X SP ) – (SQ X SP) = (210 x 5.00) – (200 x 5.00) =50kg = FOVOURABLE OR UNFAVOURABLE? = Actual quantity:210, Standard quantity: 200 =Actual is greater than standard =thus, it is unfavorable =50kg unfavorable (U)

7. MATERIAL VARIANCE A) Hanson Inc. has the following materials standard to manufacture one zippy 1.5 pounds per Zippy at $4.00 per pound Last week, 2,800 pounds of material were purchased at a total cost of $10,920 and 1700 pounds were used to make 1,000 Zippies Material price variance: MPV = ( AQ X AP ) – (AQ X SP) = (1700 x 3.9) – (1700 x 4.00) =6630 - 6800 =$- 170 = FOVOURABLE OR UNFAVOURABLE? = Actual price:3.90, Standard price: 4.00 =Actual is lower than standard, hargasebenarlebihmurah =thus, it is favorable =$170 favorable (F)

8. MATERIAL VARIANCE A) Hanson Inc. has the following materials standard to manufacture one zippy 1.5 pounds per Zippy at $4.00 per pound Last week, 2,800 pounds of material were purchased at a total cost of $10,920 and 1700 pounds were used to make 1,000 Zippies Material quantity variance: MPV = ( AQ X SP ) – (SQ X SP) = (1700 x 4.00) – (1500 x 4.00) =800 pounds = FOVOURABLE OR UNFAVOURABLE? = Actual quantity:1700, Standard quantity: 1,500 =Actual is greater than standard, terlebihgunameterial =thus, it is unfavorable =800 pounds (U)

9. Spending Variance Spending variance= MPV + MQV MPV=170 F MQV=800 U Therefore, Spending variance = -170F + 800U=630U

10. DIRECT LABOR VARIANCE Formula? To calculate Direct labor rate variance To calculate Direct Labor efficiency variance

11. DIRECT LABOR VARIANCE 1. Glacier peak Outfitters has the following direct labor standard for its mountain parka 1.2 standard hours per parka at $10.00 per hour Last month, employees actually worked 2,500 at a total labor cost of $26,250 to make 2000 parkas Find Direct labor rate, efficiency and total spending variances. How to solve this problem?

12. DIRECT LABOR VARIANCE 1. Glacier peak Outfitters has the following direct labor standard for its mountain parka 1.2 standard hours per parka at $10.00 per hour Last month, employees actually worked 2,500 at a total labor cost of $26,250 to make 2000 parkas DL rate variance: DL rate Variance = ( AH X AR ) – (AH X SR) = (2500 x 10.50) – (2,500 x 10.00) =26,250 - 25000 =$1,250 = FOVOURABLE OR UNFAVOURABLE? = Actual Rate:10.50, Standard Rate: 10.00 =Actual is greater than standard, harga labor lebihmahal =thus, it is unfavorable =$1,250 (U)

13. DIRECT LABOR VARIANCE 1. Glacier peak Outfitters has the following direct labor standard for its mountain parka 1.2 standard hours per parka at $10.00 per hour Last month, employees actually worked 2,500 at a total labor cost of $26,250 to make 2000 parkas DL efficiency variance: DL efficiency Variance = ( AH X SR ) – (SH X SR) = (2500 x 10.00) – (( 1.2X 2000)2,400 x 10.00) =25,000 - 24000 =1000 hours = FOVOURABLE OR UNFAVOURABLE? = Actual efficiency:2500, Standard efficiency: 2400 =Actual is greater than standard, labor ambilmasaterlalu lama(x cekap) =thus, it is unfavorable =1000 hours (U)

14. DIRECT LABOR VARIANCE Spending variance= DL rate + DL efficiency DL rate=$1250 U DL efficiency=1000 U Therefore, Spending variance = 1250U + 1000U=2250U

15. DIRECT LABOR VARIANCE 1. Hanson Inc, has the following direct labor standard to manufacture one zippy 1.5 standard hours per zippy at $12.00 per hour Last week, 1,550 direct labor hours were worked at a total labor cost of $18,910 to make 1,000 zippies Find Direct labor rate, efficiency and total spending variances. How to solve this problem?

16. DIRECT LABOR VARIANCE 1. Hanson Inc, has the following direct labor standard to manufacture one zippy 1.5 standard hours per zippy at $12.00 per hour Last week, 1,550 direct labor hours were worked at a total labor cost of $18,910 to make 1,000 zippies DL rate variance: DL rate Variance = ( AH X AR ) – (AH X SR) = (1550x 12.20) – (1,550 x 12.00) =18,910 – 18,600 =$310 = FOVOURABLE OR UNFAVOURABLE? = Actual Rate:12.20, Standard Rate: 12.00 =Actual is greater than standard, harga labor lebihmahal =thus, it is unfavorable =$310 (U)

17. DIRECT LABOR VARIANCE 1. Hanson Inc, has the following direct labor standard to manufacture one zippy 1.5 standard hours per zippy at $12.00 per hour Last week, 1,550 direct labor hours were worked at a total labor cost of $18,910 to make 1,000 zippies DL efficiency variance: DL efficiency Variance = ( AH X SR ) – (SH X SR) = (1550 x 12.00) – (( 1.5X 1000)1,500x 12.00) =18,600 – 18,000 =600 hours = FOVOURABLE OR UNFAVOURABLE? = Actual efficiency:1550, Standard efficiency: 1500 =Actual is greater than standard, labor ambilmasaterlalu lama(x cekap) =thus, it is unfavorable =600 hours (U)

18. DIRECT LABOR VARIANCE Spending variance= DL rate + DL efficiency DL rate=$310 U DL efficiency=600 U Therefore, Spending variance = 310 U + 600 U=910U

19. VARIABLE OVERHEAD VARIANCES 1. Glacier peak Outfitters has the following direct variable manufacturing overhead labor standard for its mountain parka 1.2 standard hours per parka at $4.00 per hour Last month, employees actually worked 2,500 hours to make 2000 parkas. Actual variable manufacturing overhead for the month was $10,500 Find VOH rate, efficiency and total spending variances. How to solve this problem?

20. VARIABLE OVERHEAD VARIANCES 1. Glacier peak Outfitters has the following direct variable manufacturing overhead labor standard for its mountain parka 1.2 standard hours per parka at $4.00 per hour Last month, employees actually worked 2,500 hours to make 2000 parkas. Actual variable manufacturing overhead for the month was $10,500 VOH rate variance: VOH rate Variance = ( AH X AR ) – (AH X SR) = (2500 x 4.2) – (2,500 x 4.00) =5,115 – 4,650 =$465 = FOVOURABLE OR UNFAVOURABLE? = Actual Rate:4.2, Standard Rate: 4.00 =Actual is greater than standard, harga labor lebihmahal =thus, it is unfavorable =$465 (U)

21. VARIABLE OVERHEAD VARIANCES 1. Glacier peak Outfitters has the following direct variable manufacturing overhead labor standard for its mountain parka 1.2 standard hours per parka at $4.00 per hour Last month, employees actually worked 2,500 hours to make 2000 parkas. Actual variable manufacturing overhead for the month was $10,500 VOH efficiency variance: VOH efficiency Variance = ( AH X SR ) – (SH X SR) = (2500 x 4.00) – (( 1.2X 2000)2400x 4.00) =10,000 – 9,600 =400 hours = FOVOURABLE OR UNFAVOURABLE? = Actual efficiency:2500, Standard efficiency: 2400 =Actual is greater than standard, labor ambilmasaterlalu lama(x cekap) =thus, it is unfavorable =400 hours (U)

22. VARIABLE OVERHEAD VARIANCES Spending variance= VOH rate + VOH efficiency VOH rate=$500 U VOH efficiency=400 hours U Therefore, Spending variance = 500 U + 400 U=900U

23. VARIABLE OVERHEAD VARIANCES B) Hanson Inc, has the following variable manufacturing overhead standard to manufacture one Zippy: 1.5 standard hours per zippy at $3.00 per direct labor hour Last week , 1,550 hours were worked to make 1,000 Zippies, and $5,115 was spent for variable manufacturing overhead. Find VOH rate, efficiency and total spending variances. How to solve this problem?

24. VARIABLE OVERHEAD VARIANCES B) Hanson Inc, has the following variable manufacturing overhead standard to manufacture one Zippy: 1.5 standard hours per zippy at $3.00 per direct labor hour Last week , 1,550 hours were worked to make 1,000 Zippies, and $5,115 was spent for variable manufacturing overhead VOH rate variance: VOH rate Variance = ( AH X AR ) – (AH X SR) = (1,550 x 3.30) – (1,550 x 3.00) =5,115 – 4,650 =$465 = FOVOURABLE OR UNFAVOURABLE? = Actual Rate:3.30, Standard Rate: 3.00 =Actual is greater than standard, harga labor lebihmahal =thus, it is unfavorable =$465 (U)

25. VARIABLE OVERHEAD VARIANCES B) Hanson Inc, has the following variable manufacturing overhead standard to manufacture one Zippy: 1.5 standard hours per zippy at $3.00 per direct labor hour Last week , 1,550 hours were worked to make 1,000 Zippies, and $5,115 was spent for variable manufacturing overhead VOH efficiency variance: VOH efficiency Variance = ( AH X SR ) – (SH X SR) = (1550 x 3.00) – (( 1.5X 1000)1500x 3.00) =4650 – 4500 =150 hours = FOVOURABLE OR UNFAVOURABLE? = Actual efficiency:1550, Standard efficiency: 1500 =Actual is greater than standard, labor ambilmasaterlalu lama(x cekap) =thus, it is unfavorable =150 hours (U)

26. VARIABLE OVERHEAD VARIANCES Spending variance= VOH rate + VOH efficiency VOH rate=$465 U VOH efficiency=150 hours U Therefore, Spending variance = 465 U + 150 U=615U

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