MBCII-5 Cost Accounting

Unit III:
Standard Costing and Variance Analysis
 Material Variance
Material Variance with ONE Material
 Solution to Problem No.1
1. Material Price Variance [MPV]
= Actual Quantity x [Standard Price-Actual Price]
 Solution to Problem No.1
2. Material Usage Variance [MUV]
= Standard Price x [Standard Quantity- Actual Quantity]
 Solution to Problem No.1
Material Cost Variance [MCV]
= Standard Cost of Material –Actual Cost of Material Price
= [Standard Quantity for actual output x Standard Price] -
[Actual Quantity for actual output x Actual Price]
 Solution to Problem No.1
• Reconciliation/Verification
• MCV=MPV+MUV
 Solution to Problem No.2
1. Material Price Variance [MPV]
= Actual Quantity x [Standard Price-Actual Price]
 Solution to Problem No.2
2. Material Usage Variance [MUV]
= Standard Price x [Standard Quantity- Actual Quantity]
 Solution to Problem No.2
Material Cost Variance [MCV]
= Standard Cost of Material –Actual Cost of Material Price
= [Standard Quantity for actual output x Standard Price] -
[Actual Quantity for actual output x Actual Price]
 Solution to Problem No.2
• Reconciliation/Verification
• MCV=MPV+MUV
 Solution to Problem No.3
1. Material Price Variance [MPV]
= Actual Quantity x [Standard Price-Actual Price]
 Solution to Problem No.3
2. Material Usage Variance [MUV]
= Standard Price x [Standard Quantity- Actual Quantity]
 Solution to Problem No.3
Material Cost Variance [MCV]
= Standard Cost of Material –Actual Cost of Material Price
= [Standard Quantity for actual output x Standard Price] -
[Actual Quantity for actual output x Actual Price]
 Solution to Problem No.3
• Reconciliation/Verification
• MCV=MPV+MUV
 Solution to Problem No.4
(a)
1. Material Price Variance [MPV]
= Actual Quantity x [Standard Price-Actual Price]
 Solution to Problem No.4
(a)

2. Material Usage Variance [MUV]

= Standard Price x [Standard Quantity- Actual Quantity]
 Solution to Problem No.4
(a)

Material Cost Variance [MCV]

= Standard Cost of Material –Actual Cost of Material Price
= [Standard Quantity for actual output x Standard Price] -
[Actual Quantity for actual output x Actual Price]
 Solution to Problem No.4
(a)
• Reconciliation/Verification
• MCV=MPV+MUV
 Solution to Problem No.4
(b)
1. Material Price Variance [MPV]
= Actual Quantity x [Standard Price-Actual Price]
 Solution to Problem No.4
(b)

2. Material Usage Variance [MUV]

= Standard Price x [Standard Quantity- Actual Quantity]
 Solution to Problem No.4
(b)

Material Cost Variance [MCV]

= Standard Cost of Material –Actual Cost of Material Price
= [Standard Quantity for actual output x Standard Price] -
[Actual Quantity for actual output x Actual Price]
 Solution to Problem No.4
(b)
• Reconciliation/Verification
• MCV=MPV+MUV
 Solution to Problem No.4
(c)
1. Material Price Variance [MPV]
= Actual Quantity x [Standard Price-Actual Price]
 Solution to Problem No.4
(c)

2. Material Usage Variance [MUV]

= Standard Price x [Standard Quantity- Actual Quantity]
 Solution to Problem No.4
(c)

Material Cost Variance [MCV]

= Standard Cost of Material –Actual Cost of Material Price
= [Standard Quantity for actual output x Standard Price] -
[Actual Quantity for actual output x Actual Price]
 Solution to Problem No.4
(c)
• Reconciliation/Verification
• MCV=MPV+MUV
 Solution to Problem No.4
(d)
1. Material Price Variance [MPV]
= Actual Quantity x [Standard Price-Actual Price]
 Solution to Problem No.4
(d)

2. Material Usage Variance [MUV]

= Standard Price x [Standard Quantity- Actual Quantity]
 Solution to Problem No.4
(d)

Material Cost Variance [MCV]

= Standard Cost of Material –Actual Cost of Material Price
= [Standard Quantity for actual output x Standard Price] -
[Actual Quantity for actual output x Actual Price]
 Solution to Problem No.4
(d)
• Reconciliation/Verification
• MCV=MPV+MUV
 Solution to Problem No.5
Basic Calculations :-
Actual Material Consumed :
Opening Stock + Purchases –Closing Stock

Actual Price Per Unit= Rs.9,000 = Rs. 3

3000units
 Solution to Problem No.5
1. Material Price Variance [MPV]
= Actual Quantity x [Standard Price-Actual Price]
 Solution to Problem No.5
2. Material Usage Variance [MUV]
= Standard Price x [Standard Quantity- Actual Quantity]
 Solution to Problem No.5
Material Cost Variance [MCV]
= Standard Cost of Material –Actual Cost of Material Price
= [Standard Quantity for actual output x Standard Price] -
[Actual Quantity for actual output x Actual Price]
 Solution to Problem No.5
• Reconciliation/Verification
• MCV=MPV+MUV
 Solution to Problem No.6
Basic Calculations :-
Quantity Consumed = 1 X 10,100 = 50.5
200
 Solution to Problem No.6
1. Material Price Variance [MPV]
= Actual Quantity x [Standard Price-Actual Price]
 Solution to Problem No.6
2. Material Usage Variance [MUV]
= Standard Price x [Standard Quantity- Actual Quantity]
 Solution to Problem No.6
Material Cost Variance [MCV]
= Standard Cost of Material –Actual Cost of Material Price
= [Standard Quantity for actual output x Standard Price] -
[Actual Quantity for actual output x Actual Price]
 Solution to Problem No.6
• Reconciliation/Verification
• MCV=MPV+MUV
Material Variance with TWO Materials
 Solution to Problem No.7
Standard Actual
Material
Qty. (Kg.) Rate (Rs.) Amount (Rs.) Qty. (Kg.) Rate (Rs.) Amount (Rs.)

A
B

Input
Loss

Output

Working Note:
Computation of Standard Quantity for Actual Mix
Material A :
Material B :
 Solution to Problem No.7
• Material Cost Variance [MCV]
 Solution to Problem No.7
• Material Price Variance [MPV]
 Solution to Problem No.7
• Material Mix Variance [MMV]
 Solution to Problem No.7
• Material Yield Variance [MYV]
 Solution to Problem No.7
• Reconciliation/Verification
• MCV=MPV+MMV + MYV
 Solution to Problem No.8
Standard [for 8000 kgs of output} Actual [for 8000 kgs of output}
Material
Qty. (Kg.) Rate (Rs.) Amount (Rs.) Qty. (Kg.) Rate (Rs.) Amount (Rs.)

A
B

Input
Loss

Output

Working Note:
Computation of Standard Quantity for Actual Mix
Material A :
Material B :
 Solution to Problem No.8
• Material MIX Variance [MMV]
 Solution to Problem No.8
• Material Yield Variance [MYV]

• Note: Reconciliation/Verification is not possible as complete

information is not available
 Solution to Problem No.9
Standard (For 400 tons of input) Actual (For 400 tons of input)
Material
Qty. (Kg.) Rate (Rs.) Amount (Rs.) Qty. (Kg.) Rate (Rs.) Amount (Rs.)

C
D

Input
Loss

Output

Working Note:
Computation of Standard Quantity for Actual Mix
Material A :
Material B :
 Solution to Problem No.9
• Material Price Variance [MPV]
 Solution to Problem No.9
• Material Mix Variance [MMV]
 Solution to Problem No.9
• Material Yield Variance [MYV]
 Solution to Problem No.9
• Total Material Cost Variance [MCV]
 Solution to Problem No.9
• Reconciliation/Verification
• MCV=MPV+MMV + MYV
• Material Variance with THREE Materials
 Solution to Problem No.10
2. Material Price Variance [MPV]
= Standard Price x [Standard Quantity- Actual Quantity]
 Solution to Problem No.10
Material Usage Variance [MUV]
=
 Solution to Problem No.10
• Material Cost Variance [MCV]
 Solution to Problem No.10
• Reconciliation/Verification
• MCV=MPV+MUV
Solution to Problem No.11
 Solution to Problem No.11
• Working Notes:
 Solution to Problem No.11
• Material Mix Variance [MMV]:
 Solution to Problem No.11
• Material Yield Variance [MYV]: