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प्रश्न
The Standard mix of a product is as follows :
| Material | Units | Price per Unit (Rs.) |
| A | 30 | 20 |
| B | 20 | 15 |
| C | 50 | 30 |
Standard Loss in Production - 10%
Actual Production - 8,000 units.
The actuaI purchases and consumption of materials during the month were:
| Material | Units | Price per Unit (Rs.) |
| A | 2,500 | 25 Ps. |
| B | 1,600 | 10 Ps. |
| C | 4,500 | 40 Ps. |
Compute the various 'Material Variances'.
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उत्तर
Actual Production = 8,000 units.
Standard Loss = 10%
It means,
| Expected Output (Units) | Input (Units) |
| 90 | 100 |
| 8,000 | ? |
`=(8,000xx100)/90`
= 8,889 Units
From the above information, we can prepare the table in the following way.
| Material | Standard | Actual | Standard Proportion of ActuaI Input (Units) | ||||
| Units | Rate (Rs.) | Total (Rs.) | Units | Rate (Rs.) | Total (Rs.) | ||
| A | 2,667 | 0.20 | 533 | 2,500 | 0.25 | 625 | 2,580 |
| B | 1,778 | 0.15 | 267 | 1,600 | 0.10 | 160 | 1,720 |
| C | 4,444 | 0.30 | 1,333 | 4,500 | 0.40 | 1,800 | 4,300 |
| 8,889 | 2,133 | 8,600 | 2,585 | 8,600 | |||
(a) Material Price Variance (MPV) = (SR-AR) x AQ
Material A : (0.20) - (0.25) x 2,500 = Rs. 125 (A)
Material B : (0.15) - (0.10) x 1,600 = Rs. 80 (F)
Material C : (0.30) - (0.40) x 4,500 = Rs. 450 (A)
Rs. 495 (A)
(b) Material Usage Variance = (SQ - AQ) x SR
Material A : (2,667 - 2,500) x 0.20 = Rs. 33.40 (F)
Material B : (1,778 - 1,600) x 0.15 = Rs. 26.70 (F)
Material C : (4,444 - 4,500) x 0.30 = Rs. 16.80 (A)
Rs. 43.30 (F)
(c) Material Cost Variance= (SQ x SR)-(AQ x AR)
Material A : (2,667 x 0.20) - (2,500 x 0.25) = Rs. 92 (A)
Material B : (1,778 x 0.15) - (1,600 x 0.10) = Rs. 107 (F)
Material C : (4,444 x 0.30) - ( 4,500 x 0.40) = Rs. 467 (A)
Rs. 452 (A)
(d) Material Mix Variance = SR x Difference in Mix
Material A : 0.20 x (2,580 - 2,500) = Rs. 16 (F)
Material B : 0.15 x (1,720 - 1,600) = Rs. 18 (F)
Material C : 0.30 x (4 ,300 - 4,500) = Rs. 60 (A)
Rs. 26 (A)
Working Notes:
(1) Standard Units of 8,889 are distributed among Materials A, B and C in the ratio of 3 : 2 : 5 respectively in the following ways :
Material A : `8,889xx3/10=2,667` Units
Material B : `8,889xx2/10=1,778` Units
Material C : `8,889xx5/10=4,444` Units
(2) Standard proportion of Actual input of 8,600 kg are also distributed among materials A, B and C in the ratio of 3 : 2 : 5 respectively.
