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Material cost variances

Material cost variances. Problem Q.paper April-2007 : In a firm budgeted- actual figure of the cost of Materials &direct labour cost incurred in the production during the month of march2007 are as under. You are required to calculate M.C.V, MPV&MUV SOLUTION :

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Material cost variances

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  1. Material cost variances Problem Q.paper April-2007 : In a firm budgeted- actual figure of the cost of Materials &direct labour cost incurred in the production during the month of march2007 are as under

  2. You are required to calculate M.C.V, MPV&MUV SOLUTION : calculation of standard quantity of actual output. for-> 400000 - 800000 360000 - ? 800000*360000/400000=720000

  3. Standard price = total cost /standard quantity = 4800000/720000=6.67 Actual price =total cost / actual quantity = 6006000/7280000=8.25 a) material cost variance: MCV =(SQ*SP) – (AQ*AP) =(720000*6.67) – (728000*8.25) = 4802400 – 6006000 = -1203600 (adverse)

  4. b) Material price variance: MPV = (SP-AP)* AQ = (6.67-8.25)*728000 = (-1.58)*728000 = -1150240 (adverse) c) Material usage variance: MUV =(SQ-AQ)*SP = (720000-728000)*6.67 = (-8000)*6.67 = -53360(adverse)

  5. Thank you ….! by swaroop

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