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    Standard Costing and Variance Analysis Problems

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    Joann Rivero
    The document provides examples of standard costing and variance analysis problems and their solutions. Problem 1 calculates materials price and quantity variances. The materials price variance was favorable ₱2,000 while the materials quantity variance was unfavorable ₱720. Problem 2 calculates labor rate and efficiency variances, with the labor rate variance unfavorable ₱237 and labor efficiency variance favorable ₱135. Problem 5 provides additional data and requires calculation of standard materials allowed, actual materials used, standard hours allowed, and actual hours worked.

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    Standard Costing and Variance Analysis Problems

    Uploaded by

    Joann Rivero
    252 views4 pages
    The document provides examples of standard costing and variance analysis problems and their solutions. Problem 1 calculates materials price and quantity variances. The materials price variance was favorable ₱2,000 while the materials quantity variance was unfavorable ₱720. Problem 2 calculates labor rate and efficiency variances, with the labor rate variance unfavorable ₱237 and labor efficiency variance favorable ₱135. Problem 5 provides additional data and requires calculation of standard materials allowed, actual materials used, standard hours allowed, and actual hours worked.

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    The document provides examples of standard costing and variance analysis problems and their solutions. Problem 1 calculates materials price and quantity variances. The materials price variance was favorable ₱2,000 while the materials quantity variance was unfavorable ₱720. Problem 2 calculates labor rate and efficiency variances, with the labor rate variance unfavorable ₱237 and labor efficiency variance favorable ₱135. Problem 5 provides additional data and requires calculation of standard materials allowed, actual materials used, standard hours allowed, and actual hours worked.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    252 views4 pages

    Standard Costing and Variance Analysis Problems

    Uploaded by

    Joann Rivero
    The document provides examples of standard costing and variance analysis problems and their solutions. Problem 1 calculates materials price and quantity variances. The materials price variance was favorable ₱2,000 while the materials quantity variance was unfavorable ₱720. Problem 2 calculates labor rate and efficiency variances, with the labor rate variance unfavorable ₱237 and labor efficiency variance favorable ₱135. Problem 5 provides additional data and requires calculation of standard materials allowed, actual materials used, standard hours allowed, and actual hours worked.

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    © All Rights Reserved
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    You are on page 1of 4

    JOANN R.

    SALOMON COST ACCOUNTING


    BSA IVX

    Standard Costing and Variance Analysis Problems & Solution:

    The scenario of STD costing and variance analysis.


    http://www.accountingformanagement.com/standard_costing_system_solved_problems.htm

    Problem 1:
    Materials Variance Analysis:
    The Schlosser Lawn Furniture Company uses 12 meters of aluminum pipe at ₱0.80 per
    meter as standard for the production of its Type A lawn chair. During one month's
    operations, 100,000 meters of the pipe were purchased at ₱0.78 a meter, and 7,200 chairs
    were produced using 87,300 meters of pipe. The materials price variance is recognized
    when materials are purchased.

    Required: Materials price and quantity variances.

    Solution:
    Meters of pipe Unit Cost Amount
    Actual quantity purchased 100,000 ₱0.78 actual ₱78,000
    actual quantity purchased 100,000 ₱0.80 standard ₱80,000
    ----------- ----------- -----------
    Materials purchase price variance 100,000 ₱ (0.02) ₱ (2,000) fav.
    ======= ======= =======
    Actual quantity used 87,300 0.80 standard ₱69,840
    Standard quantity allowed 86,400 0.80 standard ₱69,120
    ------------- ------------- -------------
    Materials quantity variance 900 0.80 ₱720 Unfav.
    ======= ======= =======

    1|Page
    JOANN R. SALOMON COST ACCOUNTING
    BSA IVX

    Problem 2:
    Labor Variance Analysis:
    The processing of a product requires a standard of 0.8 direct labor hours per unit for Operation 4-802 at
    a standard wage rate of ₱6.75 per hour. The 2,000 units actually required 1,580 direct labor hours at a
    cost of ₱6.90 per hour.
    Required: Calculate:

     labor rate variance or Labor price variance.


     Labor efficiency or usage or quantity variance.

    Solution:
    Time Rate Amount

    Actual hours worked 1,580 ₱6.90 actual ₱10,902


    Actual hours worked 1.580 ₱6.75 standard 10,665

    -------- -------- --------

    Labor rate variance 1,580 ₱0.15 ₱237 unfav.


    ===== ===== =====

    Actual hours worked 1,580 ₱6.75 standard ₱10,665


    Standard hours allowed 1,600 ₱6.75 standard ₱10,800
    ---------- ------------ -----------

    Labor efficiency variance (20) 6.75 standard ₱ (135) fav.


    ====== ====== ======

    2|Page
    JOANN R. SALOMON COST ACCOUNTING
    BSA IVX

    Problem 5:
    Variance Analysis:
    On May 1, Bovar Company began the manufacture of a new mechanical device known a "Dandy." The
    company installed a standard cost system in accounting for manufacturing costs. The standard costs
    for a unit of Dandy are:

    Materials: 6 lbs. at ₱1 per lb. ₱6.00

    Direct labor: 1 hour at ₱4 per hour ₱4.00


    Factory overhead: 75% of direct labor cost ₱3.00
    -----------

    Total ₱13.00
    ======

    The following data were obtained from Bovar's record for may:

    Actual production of Dandy 4,000 units

    Units sold of Dandy 2,500

    Sales ₱50,000
    Purchases (26,000 pounds) 27,300

    Materials price variance (applicable to May purchase) ₱1,300 unfavorable


    Materials quantity variance 1,000 unfavorable

    Direct labor rate variance 760 unfavorable.

    Direct labor efficiency variance 800 favorable

    Factory overhead total variance 500 unfavorable

    Required:
    1. Standard quantity of materials allowed (in pounds).
    2. Actual quantity of materials used (in pounds).
    3. Standards hours allowed.
    4. Actual hours allowed.
    5. Actual direct labor rate.
    6. Actual total factory overhead.

    Solution:
    3|Page
    JOANN R. SALOMON COST ACCOUNTING
    BSA IVX
    Actual production 4,000 units

    Standard materials per unit 6 pounds

    ------------

    Standard quantity of materials allowed 24,000 pounds

    =======

    Standard quantity of materials allowed 24,000 pounds

    Unfavorable materials quantity variance (₱1,000 variance / ₱1 standard price per pound) 1,000 pounds

    -------------

    Actual quantity of materials used 25,000 pounds

    ========

    Actual production 4,000 units

    Standard hours per unit 1 hour

    ------------

    Standard hours allowed 4,000 hours

    ========

    Standard hours allowed 4,000 hours

    4|Page

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