Satish Jalan Classes Courtesy: Shubham Chakraborty

Standard Costing (bird's eye view)

Cost Variances (Production Analysis) Revenue Variances (Periodic Analysis) Reconciliation

-convert standard for actual production -convert standard for actual period
Material Quality Cost Var. Material Variances Labour Variances Variable O/H Variances Fixed O/H Variances Total O/H Variances Sales Variances Profit variances Absorption Approach Marginal Approach
1 Material Cost Variance: Material Cost Variance: Labour Cost Variance: VOH Cost Variance: FOH Cost Variance: Total O/H Cost Variances: Sales Value Variance: Sales Profit Variance: Budgeted Profit ** Budgeted Profit **
(Total Std Input Cost for (Total Std Cost for Act. (Total Std Cost for Act. (Total Std Cost for Act. (Std. FOH for Act. Output - FOH Cost Variance + VOH (Act. Sales for Act. Period - (Act. Profit for Act. Period - + Profit Price Var. ** + Contbn. Price Var. **
Act. Output - Act Input Output - Total act Cost) Output - Total act Cost) Output - Total act Cost for Act. FOH) Cost Variance Bud. Sales for Act. Period) Bud. Profit for Act. Period) + Profit Volume Var. ** + Contbn. Volume Var. **
Cost) Prdctv hrs) + Cost Var. + Cost Var.
2 Material Price Variance: Material Price Variance: labour Rate Variance: VOH Rate/Exp. Variance: FOH Exp. Variance: Total O/H Exp. Variance: Sales Price Variance: Profit Price Variance: MCV ** MCV **
(Std Pr. -Act Pr.) x Act Qt. (Std Pr. -Act Pr.) x Act Qt. (Std. Rate - Act. Rate) x Act. (Std. Rate/hr. - Act (Bud. FOH for Bud. Output - VOH Exp. Variance + FOH (Act. Price - Std. Price) x (Act. Profit/ut. - LCV ** LCV **
=Std Pr. x Act Qt.-Act Pr. x =Std Pr. x Act Qt.-Act Pr. x Hrs paid Rate/hr.) x Act. Prdctv hrs Act. FOH) Exp. Varinace. Act. output sold Std.profit/ut.) x Act. output VOHCV ** VOHCV **
Act Qt. Act Qt. = AP x AO - SP x AO sold FOH Exp. Var. ** FOH Exp. Var. ** **
= AP x AO - SP x AO FOH Vol. Var. ** **
3 Material Usage Variance: Material Usage Variance: Labour Efficiency VOH Efficiency Variance: FOH Volume Variance: VOH Efficiency Variance: Sales Volume Variance: Profit Volume Variance: Actual Profit Actual Profit
(Std Qt.-Act Qt.) x Std Pr. (Std Qt. for Act. Output-Act Variance: (Std. Hrs for Act. Output - (Act. Output - Bud. Output) (Std. Hrs for Act. Output - (Act. Output sold - Bud (Act. Output sold - Bud on Act Cost ** on Act Cost **
=Std Qt. x Std Pr. - Act Qt. x Qt.) x Std Pr. (Std. Hrs for Act. Out put - Act. Prdctv hrs) x Std. x Std. FOH/ut. Act. Prdctv hrs) x Std. output sold) x Std Selling output sold) x Std Profit/ut.
Std. Pr. =Std Qt. x Std Pr. - Act Qt. x Act. Prodctv Hrs) x Std Rate/hr. Rate/hr. price/ut. =AO x Std. Profit/ut - BO x A) Profit Price Var. = Sales
Std. Pr. Rate/hr =AO x Std. SP - BO x Std. SP Std. Profit/ut Price Var. A) Contbn. Price Var. =
Sales Price Var.
4 Material Mix Variance: Material Mix Variance: Labour Mix Variance: FOH Calendar Variance: FOH Volume Variance: Sales Mix Variance: Profit Mix Variance:
(Std. Prop. - Act. Prop.) x (Std. Prop. - Act. Prop.) x (TAPH/TSH) x TSC -(APH x (Act. Working dy - Bud. (Act. Output - Bud. Output) (Act. Prop - Std. Prop) x (Act. Prop - Std. Prop) x B) Contbn. Volume Var. =
Total std. Qt. x StdPr. Total std. Qt. x StdPr. SR) Working dy) x Std. FOH/day x Std. FOH/ut. TAO x Std. SP/ut TAO x Std. Profit/ut Profit Volume Var. + FOH
=(TAQ/TSQ) x TSC-(AQ x =(TAQ/TSQ) x TSC-(AQ x SP) =AO x Std SP - (TAO/TSO) x =AO x Std. Profit/ut - Volume Var.
SP) Total Bud. Sales (TAO/TBO) x Total Bud.
Profit
5 Material Yield Variance: Material Yield Variance: Labour Yield Variance: FOH Capacity Sales Qty. Yield Variance: Profit Qty. Variance: Note: Note:
(Total Std Qt. for Act. (Total Std Qt. for Act. (Total Std Hr. -Total Act. Var.(Revised): (Total Act. Output - Total (Total Act. Output - Total Add: Fav. Variances Add: Fav. Variances
Output - Total Act. Qt.) x Output - Total Act. Qt.) x Prdctv Hrs) x Std. Wtd. Avg. (Act. Hrs - Bud. Hrs in act Bud. Output) x Std. Wtd. Bud. Output) x Std. Wtd. Less: Adv. Variances Less: Adv. Variances
Std. Wtd. Avg. Pr. Std. Wtd. Avg. Pr. Rate dys) x Std FOH/hr Avg Price/ut. Avg Profit/ut.

6 Mat. Rework Cost Var.: Labour Idle Time Var.: FOH Idle Time Variance: Market Size Variance: Market Size Variance:
(Std Rewrk cost for Act (Std. Abnrml Idle tm - Act. (Std. Idle Tm - Act. Idle Tm) (Act. Industry Sales ut - (Act. Industry Sales ut -
Output - Act. Rewrk cost) Abnrml Idle tm) x Std x Std FOH/hr Bud. Industry sales ut) x Bud. Industry sales ut) x
Rate/hr Bud share% x Std. Wtd. Avg Bud sales% x Std. Wtd. Avg
Price/ut. Profit/ut.
(For Ab. Idle Time)
7 Mat. Scrap realisation FOH Efficiency Variance: Market Share Variance: Market Share Variance:
Variance: (Std. Hrs for Act. Output - (Act. Share% - Bud. Share%) (Act. Share% - Bud. Share%)
(Act. Scrap Rlsn-Std Scrp Act. Prdctv hrs) x Std. x Act. Industry Sales x Std. x Act. Industry Sales x Std.
Rlsn for Act. Out put) Rate/hr. Wtd. Avg Price/ut. Wtd. Avg Profit/ut.

8 Material Quality Cost Var.

(Std net Mat. Cost for Act.
Output - Act net Mat. Cost)

9 Check: 1= 2+3; 3= 4+5; Check: 1= 2+3 ; 3= 4+5 Check: 1= 2+3 ; 3= 4+5+6 Check: 1= 2+3 Check: 1= 2+3 ; Check: 1=2+3+4 Check: 1= 2+3 ;3= 4+5; Check: 1= 2+3 ;3= 4+5;
8=1+6+7 3= 4+5+6+7 5= 6+7 5= 6+7

A) Emergency Purchase
Effect.
Additional Price over act.
Purchase Price should be
charged to Production
Manager.
B) Single Plan: Closing st. at
std price. & MPV on
Purchase Qty.
Partial Plan: Closing st. at
actual price. & MPV on Qty.
consumed.
A) Std. Hrs produced is out A) Can vary with output A) Marginal Approach: No A) 3 points analysis. A) Cost is constant A) Product Cost = Variable A) Product Cost = Variable
put measure for multiple produced, then no VOH Eff. FOH Vol Var. at Std. Cost Cost + Fixed Cost Cost
products. Var.
B) FOH Ratios: B) Profit Price Variance Period Cost = Selling Cost. Period Cost = Fixed Cost.
B) Where no. of employees 1. Vol. Ratio= AO/BO = Sales Price Variance.
given take Man-Hrs. 2. Cal. Ratio= Act days/Bud B) Margin = Profit = SP-VC- B) Margin =Cont. = SP-VC
Days. FC
C) Std. Ab. Idle Time is 3. Capa. Ratio= AH/BH in
always "0" ; ITV is adverse. act days.
4. Eff. Ratio= SH for AO/AH
(1 = 2 x 3 x 4)