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Cost Variance Analysis Summary

This document contains the answers to multiple questions regarding cost accounting. It provides details on direct material, direct labor, and overhead variances for two different manufacturing scenarios. Standard and actual costs are compared to calculate variances. It also summarizes variances in sales price, volume, mix, and quantity between budgeted and actual results for two products.

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95 views4 pages

Cost Variance Analysis Summary

This document contains the answers to multiple questions regarding cost accounting. It provides details on direct material, direct labor, and overhead variances for two different manufacturing scenarios. Standard and actual costs are compared to calculate variances. It also summarizes variances in sales price, volume, mix, and quantity between budgeted and actual results for two products.

Uploaded by

wossen gebremariam
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Cost accounting II

Answer for question one


Given
Direct material Direct labor Variable Manufacturing
overhead
Standard 4 yards 1.6 hours 1.6 hours
Br. 3.6 per yard Br. 4.5 per hour Br. 1.8 per hour
Actual 4.4 yards 1.4 hours 1.4 hours
Br. 3.35 per hour Br. 4.85 per hour Br. 2.15 per hour
AQ produced 4800 unit
AQ Purchased 21,120 Yards

a. Direct-material price variance = (AP – SP) x AQ

= (3.35 – 3.60) X 21120 = Br. Favorable


b. Direct-material quantity variance =
(AQ – SQ ) SP

SQ = Actual output x Material allowed per unit of out put


= 4800 x 4 yard
= 19200 yard
DMQV = (21120-19200) x 3.6 = Br. 6912 Unfavorable
c. Direct-labor rate variance = (AR – SR) X AH
AH = Actual output x Actual hour = 4800 x 1.4
= 6720 hours
DLRV = (4.85 – 4.50 ) x 6720
= Br. 2352 Unfavorable
d. Direct-labor efficiency variance = (AH – SH)  SR
SH = Actual output x Standard hour = 4800 x 1.6
= 7680 hours
DLEV = (6720 – 7680 ) x 4.5
= Br. 4320 Favorable
e. Variable manufacturing overhead = Actual variable overhead-(SR x AH)
spending variance
= (36,500  $8.26) – (36,500  $8.20)
= $2,190 Unfavorable
f. Variable manufacturing overhead = (AH - SH) x VOH rate
efficiency variance
= (6720- 7680) x 1.8 = 960 x 1.8
= Br. 1728 Favorable

Page 1 of 4
Cost accounting II

Given AR= actual cost /actual hours


 AQ used = 93000 Kg = 820500/147,000
 Sp per unit = Br. 4.30 per kilogram =5.581633
 AQ purchased = 110,000 kg AP per unit = TAC/AQ purchased
 AH= 147,000 hours = 485,000/110,000
 AQ cost =485,000 = Br. 4.4091 per KG
 AQL cost =820,500 SQ used =actual output x Material allowed per unit
 FG produced = 46,000 unit of out put
 AVOH cost =986,000 = 46000 X 2 Kg
 FG sold = 42,000 units = 92,000 Kg
 SR L= Br. 6 SQ cost = SP x AQ purchase
 SVOHR = Br. 6.5 = 4.3x110,000
= Br. 47,300
SH= FG produced x SH per unit AVOHR= AVOH cost/Actual hour =986,000/147,000
=3x46,000 = Br. 6.707483
=138,000 hrs

a. Direct-material price variance = (AP – SP) x AQ

= (4.4091 – 4.30) x 110,000


= 0.1091 x 110,000= Br. 12,000 Unfavorable
b. Direct-material quantity variance =
(AQ – SQ ) SP

= (93,000- 92,000) x 4.3


= 1000 x 4.3 = Br. 4,300 Unfavorable
c. Direct-labor rate variance = (AR – SR) X AH
= ( 5.581633 – 6) 147,000
= 0.418367 x 147,000
= Br. 61,500 Favorable
d. Direct-labor efficiency variance = (AH – SH)  SR
= (147,000 – 138,000) x 6 = 90,000 x 6 =54,000 U
e. Variable manufacturing overhead = (AVOHR – SVOHR) x AH
spending variance
= (6.707483 – 6.5 ) x 147,000
= 0.207483 x 147,000
Br. 30,500 Unfavorable
f. Variable manufacturing overhead = (AH - SH) x SVOHR
efficiency variance
= (147,000 – 138,000) x 6.5 = 9000x 6.5=

Page 2 of 4
Cost accounting II

= Br. 58,500 Unfavorable


Answer for question Two

Answer for Question Three

Given
Product Budgeted Data Actual data
Sale price per Sale Volume Sale mix Total revenue Sale price per Sale Volume Sale Total revenue
unit unit m
i
x
Konka 2,600 60,000 80% 156,000,000 2,800 58,800 70% 164,640,000
Gold star 2000 15,000 20% 30,000,000 1,500 25,200 30% 37,800,000
75,000 186,000,000 84,000 202,440,000

Budgeted market share =75%


Actual market share = 120,000
A. Market Size Variance = ( Actual Market Size - Budget Market Size) Budget Market
Share x Budget Avg CM
Budget Market Size= budgeted sale unit /Bugdeted Markrt share
=75,000/0.75
=100,000 unit
Budget Avg CM = Budgeted total sale/Budgeted sale in unit
=186,000,000/75,000
=2480
Market size = (120,000 – 100,000) x 0.75x2480
=20,000 x 0.75 x 2480
=Br. 37,200,000 F
B. Market share variance = (Actual Market Share % - Budget Market Share %) x Budget Avg
CM X Actual Actual Market Size
= (0.7 -0.75) x 120,000 x 2480
= Br. 14, 880,000 U

Actual Market Share % = Actual sale in unit /Actual Mkt size = 84,000/120,000 = 0.70

Page 3 of 4
Cost accounting II

C. Sale mix Var. = (Actual sale Mix % - Budgeted Mix % )x Actual unit of product sold x
Budgeted SP per unit
Konka = (0.7 – 0.8) x 84,000 x 2,600 = 21, 840, 000 U
Gold star = ( 0.3 – 0.2 ) x 84,000 x 2000 = 16 ,800,000 F
Total Sale mix var. = Br. 5,040,000 U
D. Sales quantity var. = (Actual unit of all product sold - Budgeted unit of all product sold ) x
Budgeted sale mix % x Budgeted SP per unit

Konka = (84,000 – 75,000) x 0.8 x 2600 = 18,720,000

Gold star = (84,000 – 75,000) x 2000 = 36,000,000

Total sales quantity Var. = Br. 22, 320,000 F


Or Sale quantity Var. = Market Size Variance + Market share variance
= 37,200,000 F + 14, 880,000 U
= Br. 22,320,000

Page 4 of 4

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