Ca Final Costing Formulas

Topics: Costs, Management accounting, Cost Pages: 11 (3753 words) Published: February 24, 2013
1.1 Material costs variance = (Standard quantity x Standard Price) – (Actual quantity x Actual price) MCV = (SQ × SP) – (AQ × AP) 1.2 Material price variance = Actual quantity × (Standard price – Actual price) MPV = AQ × (SP – AP) 1.3 Material usage variance = Standard price (Standard quantity – Actual quantity) MUV = SP × (SQ –AQ) 1.4 Material cost variance = Material usage variance + Material price variance MCV = MUV + MPV

1. Material Variance

Material usage variance is further sub-divided into:
i) Material mix variance ii) Material yield variance. (Or Material sub-usage variance) 1.5 Material mix variance = (Revised standard quantity – Actual quantity) × Standard price MMV = (RSQ – AQ) × SP Revised standard quantity = (Standard quantity of one material × Total of actual quantities materials) / Total of standard quantities s of all materials 1.6 Material revised usage variance= (Standard quantity–Revised standard quantity) ×Standard Price MRUV = (SQ – RSQ) × SP 1.7 Material yield variance = (Actual yield – Standard yield) × Standard output price MYV = (AY – SY) × SOP Material usage variance = Material mix variance + Material yield variance (MUV= MMV + MYV)



Or Material usage variance = Material mix variance + Material revised usage variance (MUV = MMV + MRUV) Note: Material revised usage variance is also known as material sub – usage variance. In each case there will be only one variance either material yield or material revised Usage variance.

2.1 Labour Cost variance = (Std. hours for actual output × Std. rate per hour) – (Actual hours × Actual rate per hour) LCV = (SH × SR) – (AH × AR) 2.2 Labour rate variance = Actual time (Std. rate – Actual rate) LRV = AH × (SR – AR) 2.3 Labour efficiency (or time) variance = Std. rate (Std. hours for actual output–Actual hours) LEV= SR × (SH – AH) Check: Labour cost variance = Labour efficiency variance + Labour rate variance LCV = LEV + LRV

2. Labour Variance

Labour efficiency variance is further divided into the following variances: (i) Idle time variance (ii) Labour mi× variance (iii) Labour yield variance (or Labour revised-efficiency variance) 2.4 Idle time variance = Idle hours × Standard rate ITV = IH × SR 2.5 Labour mix variance = (Revised std. hours – Actual hours) × Standard rate LMV = (RSH – AH) × SR 2.6 Labour revised efficiency variance = (Std. hours for actual output–Revised std. hours) × Standard rate LREV = (SH – RSH) × SR 2.7 Labour yield variance = (Actual yield–Std. yield from actual input) × Std. Labour cost per unit of output LYV = (AY – SY) × SLC Check: Labour efficiency variance= Idle time variance + Labour mix variance + Labour yield variance LEV = ITV + LMV + LYV (or LREV)

3. Overhead Variance
Basic terms used in the computation of overhead variance Standard overhead rate (per hour) = Budgeted overhead ÷ budgeted hours or Standard overhead rate (per unit) = Budgeted Overhead ÷ Budgeted output in units Note: Separate overhead rates will be computed for fixed and variable overheads.

Basic calculations before the computation of overhead variances: (i) When overhead rate per hour is used: (a) Standard hours for actual output (SHAO) = (Budgeted hours × Actual output) ÷ Budgeted output (b) Absorbed (or Recovered) overhead = Std. hours for actual output × Std. overhead rate per hour (c) Standard overhead =Actual hours × Std. overhead rate per hour (d) Budgeted overhead =Budgeted hours × Std. overhead rate per hour (e) Actual overhead = Actual hours × Actual overhead rate per hour

(ii) When overhead rate per unit is used (a) Standard output for actual hours (SOAH) = [Budgeted output (in units) × Actual hours] ÷ Budgeted hours (b) Absorbed overhead = Actual output × Std. overhead rate per unit (c) Standard overhead = Std. output for actual time × Std. overhead rate per unit (d) Budgeted overhead =Budgeted output × Std. overhead rate per unit (e) Actual overhead = Actual output × Actual overhead...
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