Standard costing variance analyis

Aug 2nd, 2016
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Utica School of Commerce
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This file contains the solution to the problem of variance analysis: Healing touch manufactures massage chairs with the following standard cost structure

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Showing Page: 1/6
A. Calculation of VariancesI.Calculation of Material VariancesMaterialMetal tubingLeatherPaddingStandard rate (A) Standard quantity* (B)330007100041500(A) x (B)90007000600022000Standard rate (C) Actual Quantity (D) (C) X (D) Actual Rate ** (E) Actual Quantity (F) (E) X (F)3310093003.05310094557110077007.02110077224160064004.11600656023400237371. Material Price Variances = (Standard rate - Actual rate) x Actual QuantityMaterialMetal tubingLeatherPaddingStandard rateActual rate33.0577.0244.1Total Price VarianceActual quantity310011001600Variance-155-22-160-337ResultAdverseAdverseAdverseAdverse2. Material quantity Variances = (Standard quantity - Actual quantity) x Standard rateMaterialMetal tubingLeatherPaddingStandard quantityActual quantity300031001000110015001600Total quantity VarianceStandard rate374Variance-300-700-400-14003. Material cost variance = Material Price Variance + Material quantity varianceMaterial Cost Varince-1737AdverseII. Calculation of Labour Variances1. Labour rate variance = ( Standard rate - Actual rate) X Actual hours workedStandard rate of labourActual rate of labourActual hours workedLabour rate variance1515.151800-270 Adverse2. Labour effiecieny variance = (Standard hours for actual output - Actual hours worked) X Standard rateStandard hours for actual outputActual hours workedStandard rateLabour efficiency variance20001

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