Material Variances

Material Cost Variance (MCV) = (AQ X AP) – (SQ X SP)

Material price variance (MPV) = ( SP –AP ) X AQ
Material Usage Variance (MUV) = (SQ – AQ ) X SP
Where AQ = Actual quantity
AP = Actual price
SQ = Standard quantity for the actual output
SP = Standard price
Labour Variances
Labour Cost Variance (LCV) = (ST x SR) – (AT X AR)
Labour Efficiency Variance(LEV) = SR x (SH– AH)
Labour Rate Variance(LRV) = AH x (SR – AR)
ST – Standard Time for actual output
SR - Standard Rate
AT- Actual Time
AR- Actual Rate
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4. A typical cost sheet for raw material and labour required to manufacture an item is
given below.
Raw material 4 kgs at Rs. 11 Per Kg
Wages - 10 hours at Rs. 3 per Hour
The raw material and labour mentioned below were actually used to produce a total of
5,800 units in March 2019.
Raw material - 23,500 kgs at Rs. 10
Wages - 58,300 hours per hour at Rs. 3.50
Find the raw material and labour cost variances.

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