We have been given
Actual material - 3600 units
Direct wages - Rs22000
Actual output - 3500 units
Standard output - 4800 units
Actual time - 6400 hrs + 400 (break up hours)
Standard time - 9600 hours
Standard wage rate - Rs3
Actual wages - Rs3.25 really overall wages but paid Rs6 as break up wages
(a) Direct Material Cost Variance
DMCV = Total standard cost for- Total Actual cost
Actual output
= 1x 50 x 3500 – 3600 x 52.50
= 1,75,000 –1,89,000
= Rs14,000 (adverse)
(b) Material Price Variance
DMPV = Actual Quality x [Standard price-Actual price]
= 3500 x [50-52.50]
= Rs34975.50 (adverse)
(c) Material usage Variance
DMUV = Standard Rate x (standard Qlty for actual output-Actual quality)
=50 x (3500-3600)
=Rs500 (Adverse)
(d) Direct Labour Cost Variance
DLCV = (Standard Rate x Standard time for actual output)-
Actual Rate x Actual Time
= 3 x 9600 – 22000
= 28800-22000
=Rs6800
(e) Labour Rate Variance
Labour Rate Variance = Actual Time x (Standard Rate – Actual Rate
= 6800 x (3-6)
= Rs20400 (Adverse)
(f) Labour efficiency Variance
Labour efficiency variance = Standard Rates x Standard Time-Actual Time
= 3x 9600- 6800
= Rs22000
(g) Variable expenses variance
Variable expenses variance = Recovered-Actual variable
overheads heads
= 3500 x 20 – 6200
= Rs8000
(h) Fixed expenses expenditure variance
FOCV = Recovered Fixed-Actual Fixed
Overheads Overheads
= 3500 X 40 – 1,88,000
= Rs48000 (Adverse)
(i) Fixed expenditure Volume Variance
FOVV = Recovered Fixed- Budgeted
Expenses Expenses
= 1,88,000 – 1,40,000
= Rs48000
(j) Fixed expenses efficiency variance
Fixed Expenses efficiency variance = Standard Rate x
(Standard – Output x Actual Output)
= 40 x (4800-3500)
= Rs5200
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