Question 2
Paco chemicals has one product, which requires input from three types of materials to produce batches of soap. Standard cost details for a single batch are shown below:
Material type Standard quantity (kgs) Standard price per kg ($)
S1 8 0.30
S2 5 0.50
S3 3 0.40
A standard loss of 10% of unit is expected. Actual output was 15408 kgs for the previous week. Details of the material used were:
Material type Quantity (kgs)
S1 8,284
S2 7,535
S3 3,334
Required:
| Acutal Output Produced is 15408 kg.The standard quatity of material required for 15408kg of | |||||||||||
| output is 17120 Kg | (15408/90)*100 | ||||||||||
|
Statement Showing "Computation of standard Cost /Actual Cost /Revised actual Quantity |
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| Material | Standard Cost | Actual Cost | Revised Actual Quantity(RAQ KG) | ||||||||
| Quantity(SQ)(Kg.) | Standard Price(SP) | Amount(SQ*SP) | Quantity(AQ)(Kg.) | Actual Price | Amount(AQ*AP) | ||||||
| A | 8560 | 0.3 | 2568 | 8284 | 0.3 | 2485.2 | 9577 | ||||
| B | 5350 | 0.5 | 2675 | 7535 | 0.5 | 3767.5 | 5985 | ||||
| C | 3210 | 0.4 | 1284 | 3334 | 0.4 | 1333.6 | 3591 | ||||
| Total | 17120 | 6527 | 19153 | 7586.3 | 19153 | ||||||
| Note: | |||||||||||
| SQ | = | Standard Quantity | |||||||||
| AQ | = | Actual Quantity of material consumed | |||||||||
| RAQ | = | Revised Actual Quantity | |||||||||
| SP | = | Standard Price | |||||||||
| AP | = | Actual Price | |||||||||
| i) | Material Cost Variance | ||||||||||
| = | SQ*SP | - | AQ*AP | = | |||||||
| A | = | 2568 | - | 2485.2 | = | 82.8 | F | ||||
| B | = | 2675 | - | 3767.5 | = | -1092.5 | (A) | ||||
| C | = | 1284 | - | 1333.6 | = | -49.6 | (A) | ||||
| ii) | Material Price Variance | ||||||||||
| = | AQ*(SP-AP) | ||||||||||
| In the current Question Actual price is not given so it has been assumed that Actual price is same as Standard price hence material price variance can not be derived | |||||||||||
| iii) | Material Mix Variance | ||||||||||
| = | SP(RAQ-AQ) | ||||||||||
| A | = | 387.75 | F | ||||||||
| B | = | -774.844 | (A) | ||||||||
| C | = | 102.875 | F | ||||||||
| iv) | Material Yield Variance |
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