Standard Costing and Variance Analysis Problems

Problem 1:

Mix and Yield

Standard (Production: 1 unit) / Actual (Production: 1 unit)
SQ (g) / SP ($) / Total / AQ (g) / AP ($) / Total
Material A / 8 / 6 / 48 / 9 / 5 / 45
Material B / 10 / 10 / 100 / 9 / 9 / 81
Material C / 14 / 13 / 182 / 18 / 14 / 252
Total / 32 / $330 / 36 / $378

Required:

  1. Price Variance
  2. Mix Variance
  3. Yield Variance

Problem 2:

Mix and Yield

Standard (Production: 10 units) / Actual (Production: 25 unit)
SQ (g) / SP ($) / Total / AQ (g) / AP ($) / Total
Material A / 150 / 10 / 1,500 / 400 / 12 / 4,800
Material B / 120 / 17 / 2,040 / 300 / 15 / 4,500
Material C / 130 / 22 / 2,860 / 300 / 25 / 7,500
Total / 400 / $6,400 / 1000 / $16,800

Required:

  1. Price Variance
  2. Mix Variance
  3. Yield Variance

Problem 3:

Materials Variance Analysis:

The Mabuhay Lawn Furniture Company uses 12meters of aluminum pipe at $0.90 per meter as standard for the production of its Type A lawn chair. During one month's operations, 150,000 meters of the pipe were purchased at $0.82 a meter, and 7,500 chairs were produced using 100,300 meters of pipe. The materials price variance is recognized when materials are purchased.

Required:Materialsprice and quantity variances.

Problem 4:

Materials Variance Analysis:

The standard price for material 4-363 is $4.65 per liter. During December, 3,000 liters were purchased at $4.40 per liter. The quantity of material 4-363issued during the month was 1,997 liters and the quantity allowed for December production was 2,225 liters.Calculatematerialsprice variance, assuming that:

Required:Materialsprice variance, assuming that:

  1. It is recorded at point of purchase (Materialspurchase price variance).
  2. It is recorded at point of requisition (Materialsprice usage variance).

Problem 5:

Labor Variance Analysis:

The processing of a product requires a standard of 0.75 direct labor hours per unit for Operation 7-116 at a standard wage rate of $7.35 per hour. The 2,500 units actually required 1,740 direct labor hours at a cost of $7.90 per hour.

Required:Calculate:

  1. Labor rate variance.
  2. Labor efficiency variance.

Problem 6:

Factory Overhead Variance Analysis:

Borel Company uses a standard cost system. The factory overhead standard rate per direct labor hour is:

Fixed: / $5,500 / 5,000 hours / = / $1.10
Variable: / $8,500 / 5,000 hours / = / $1.70
------
$2.80

For October, actual factory overhead was $13,000 (Fixed = $5,500, Variable = $7,500), actual labor hours worked were 4,500 and the standard hours allowed for the production were 4,800.

Required:

1.)Variable OH Efficiency variance

2.)Fixed OH Efficiency variance

3.)Variable OH Spending Variance

4.)Fixed OH Spending Variance

5.)Idle Capacity Variance

6.)Controllable Variance

7.)Volume Variance

Problem 7:

Variance Analysis:

On June 1, Bogart Company began the manufacture of a newmechanicaldevice known as "Candy." The company installed a standard cost system in accounting formanufacturingcosts. The standard costs for a unit of Candy are:

Materials: 8 lbs. at $1.25 per lb. / $ 10.00
Direct labor: 1.5 hours at $5 per hour / $ 7.50
Factory overhead: 80% of direct labor cost / $ 6.00
------
Total / $23.50
======

The following data were obtained from Bogart's record for June:

Actual production of Candy / 6,000 units
Units sold of Candy / 3,750
Sales / $75,000
Purchases (50,000 pounds) / 67,500
Materialsprice variance (applicable to June purchase) / $5,000 unfavorable
Materialsusage variance / 2,000 unfavorable
Direct labor rate variance / 800 unfavorable.
Direct labor efficiency variance / 1000 favorable
Factory overhead total variance / 750 unfavorable

Required:

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

Answers:

Problem 1:Price variance - $0

Mix Variance - $6.75 unfavorable

Yield Variance - $41.25 unfavorable

Problem 2: Price variance - $1,100 unfavorable

Mix Variance - $300 favorable

Yield Variance - $0

Problem 3: MPPV - $12,000 favorable

MUV - $9,270 unfavorable

Problem 4:MPPV - $750 favorable

MPUV - $499.25 favorable

Problem 5:LRV - $957 unfavorable

LEV - $992.25 favorable

Problem 6:Variable OH Efficiency variance - $510 favorable

Fixed OH Efficiency variance - $330 favorable

Variable OH Spending Variance - $150 favorable

Fixed OH Spending Variance - $0

Idle Capacity Variance - $550 unfavorable

Controllable Variance - $660 favorable

Volume Variance - $220 unfavorable

Problem 7: Standard quantity ofmaterialsallowed – 48,000 lbs

Actual quantity ofmaterialsused – 49,600 lbs

Standards hours allowed – 9,000

Actual hours used – 8,800

Actual direct labor rate - $5.0909

Actual total factory overhead - $36,750