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Management accounting Cost Accounting gg

By Leroy Cole,2014-05-17 09:24
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Management accounting Cost Accounting gg

     1

    STANDARD COSTING

Method one of reading:-

    Material:-

     SP * SQ SP * AQ SP * RSQ AP * AQ

     (1) (2) (3) (4)

    a) Material cost variance = (1) (4)

    b) Material price variance = (2)(4)

    c) Material usage variance = (1) (2)

    d) Material mix variance = (3) (2)

    e) Material yield variance = (1) (3)

Labour :-

    SR*ST SR*AT (paid) SR*RST AR*AT SR*AT(worked)

     (1) (2) (3) (4) (5)

    a) Labour Cost variance = (1) (4) b) Labour Rate variance = (2) (4) c) Labour Efficiency variance = (1) (2) d) Labour mix variance = (3) (5)

    e) Labour Idle time variance = (5) (2)

Variable Overheads cost variance :-

     SR * ST SR * AT AR * AT

     (1) (2) (3)

    a) Variable Overheads Cost Variance = (1) (3) b) Variable Overheads Expenditure Variance = (2) (3) c) Variable Overheads Efficiency Variance = (1) (2)

     [Where: SR =Standard rate/hour = Budgeted variable OH

     Budgeted Hours ]

Fixed Overheads Cost Variance:-

     SR*ST SR*AT(worked) SR*RBT SR*BT AR*AT(paid)

     (1) (2) (3) (4) (5)

    a) Fixed Overheads Cost Variance = (1) (5) b) Fixed Overheads Budgeted Variance = (4) (5) c) Fixed Overheads Efficiency Variance = (1) (2)

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    d) Fixed Overheads Volume Variance = (1) (4) e) Fixed Overheads Capacity Variance = (2) (3) f) Fixed Overheads Calendar Variance = (3) (4) Sales value variance:-

    Budgeted Price*BQ BP*AQ BP*Budgeted mix AP*AQ

     (1) (2) (3) (4)

a) Sales value variance = (4)(1)

    b) Sales price variance = (4) (2)

    c) Sales volume variance = (2) (1)

    d) Sales mix variance = (2) (3)

    e) Sales quantity variance = (3) (1)

Note :-

    i) Actual margin per unit (AMPU) = Actual sale price selling cost per unit

    ii) Budgeted margin per unit (BMPU) = Budgeted sale price selling price per unit

Sales margin variance :-

BMPU*BQ BMPU*AQ BMPU*Budgeted mix AMPU*AQ

     (1) (2) (3) (4)

    a) Sales margin variance = (4) (1) b) Sales margin price variance = (4) (2) c) Sales margin volume variance = (2) (1) d) Sales margin mix variance = (2) (3) e) Sales margin quantity variance = (3) (1)

Control Ratio :-

    1) Efficiency Ratio = Standard hours for actual output * 100

     Actual hours worked

2) Capacity Ratio = Actual Hours Worked * 100

     Budgeted Hours

3) Activity Ratio = Actual hours worked * 100

     Budgeted Hours

Verification: Activity Ratio = Efficiency * Capacity Ratio

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    STANDARD COSTING

Method two of reading:-

    Material:-

    a) Material cost variance = SC AC = (SQ*AQ) (AQ*AP)

    b) Material price variance = AQ (SP AP)

    c) Material usage variance = SP (SQ AQ)

d) Material mix variance = SP (RSQ AQ)

e) Material yield variance = (AY SY for actual input) Standard material cost per

     unit of output

f) Material revised usage variance (calculated instead of material yield variance)

     = [standard quantity Revised standard

     for actual output quantity ] * Standard price

Labour :-

    a) Labour Cost variance = SC AC = (SH*SR) (AH*AR)

    b) Labour Rate variance = AH (SR - AR)

    c) Labour Efficiency or time variance = SR (SH AH)

d) Labour Mix or gang composition Variance = SR(RSH-AH)

e) Labour Idle Time Variance = Idle hours * SR

    f) Labour Yield Variance = [Actual Output Standard output for actual input]

     * Standard labour cost/unit of output

g) Labour Revised Efficiency Variance (instead of LYV) =

     [Standard hours for actual output Revised standard hours] * Standard rate

Notes :- i) LCV = LRV + LMV + ITV + LYV

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     ii) LCV = LRV + LEV + ITV

     iii) LEV = LMV, LYV (or) LREV

Overhead variance :- (general for both variable and fixed)

    a) Standard overhead rate (per hour) = Budgeted Overheads

     Budgeted Hours

    b) Standard hours for actual output = Budgeted hours * Actual Output

     Budgeted output

c) Standard OH = Standard hrs for actual output * Standard OH rate per hour

d) Absorbed OH = Actual hrs * Standard OH rate per hour

e) Budgeted OH = Budgeted hrs * Standard OH rate per hour

f) Actual OH = Actual hrs * Actual OH rate per hour

g) OH cost variance = Absorbed OH Actual OH

Variable Overheads variance :-

    a) Variable OH Cost Variance = Standard OH Actual OH

    b) Variable OH Exp. Variance = Absorbed OH Actual Variable OH

    c) Variable OH Efficiency Variance = Standard OH Absorbed OH

     = [Standard hours for Actual * Standard rate

     actual output hours] for variable OH

Fixed Overheads variance :-

a) Fixed OH Cost Variance = Standard OH Actual OH

    b) Fixed OH expenditure variance = Budgeted OH Actual OH

    c) Fixed OH Efficiency Variance = Standard OH (units based) Absorbed OH

     (Hours based)

    d) Fixed OH Volume Variance = Standard OH Budgeted OH

     = [Standard hrs for Budgeted * standard rate

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     actual output hours ]

    e) Fixed OH capacity variance = Absorbed OHBudgeted OH

    f) Fixed OH Calendar Variance = [Revised budgeted hrs Budgeted hrs]

     * Standard rate/hrs

Note:- When there is calendar variance capacity variance is calculated as follows :-

     Capacity variance = [Actual hours Revised * Standard

     (Revised) Budgeted hrs] rate/hour

Verification :-

i) variable OH cost variance = Variable OH Expenditure variance

     + Variable OH Efficiency variance

ii) Fixed OH cost variance = Fixed OH Expenditure variance + Fixed OH volume

     variance

iii) Fixed OH volume variance = Fixed OH Efficiency variance + Capacity variance

     + Calander variance

Sales variances :-

Turnover method (or) sales value method :-

a) Sales value variance = Actual Sales Budgeted Sales

b) Sales price variance = [Actual Price Standard price] * Actual quantity

     = Actual sales standard sales

c) Sales volume variance = [Actual-Budgeted quantity] *Standard price

     = Standard sales Budgeted sales

    d) Sales mix variance = [Actual quantity Revised standard quantity] * Standard

     price

     = Standard sales Revised sales

    e) Sales quantity variance = [Revised standard variance Budgeted quantity]

     * Standard price

     = Revised Standard sales Budgeted sales

Profit method:-

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    a) Total sales margin variance = (Actual ProfitBudgeted price)

     = {Actual quantity * Actual profit per unit}-

     {Budgeted quantity * Standard profit per unit}

    b) Sales margin price variance=Actual profitStandard profit

     = {Actual Profit per unit Standard profit per unit} * Actual quantity of sales

    c) Sales margin volume variance = Standard profit Budgeted Profit

     = {Actual quantity Budgeted quantity} * Standard profit per unit

    d) Sales margin mix variance = Standard profit Revised Standard profit

     = {Actual quantity Revised standard quantity} * Standard profit per unit

e) Sales margin quantity variance = Revised standard profit - Budgeted profit

     = {Revised standard quantity Budgeted quantity} * Standard profit per unit

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