Standard Costing Question & Answer For Materials & Labor Variances



You are required to calculate the variance in respect of the following:




(a) Materials:

Standard price-$4.15 per unit; actual price-$4.28 per unit: material requisitioned 1,000 units; production achieved 1,020



(b) Labor

Standard rate-$1.80 per hour; rate paid $1.95 per hour; standard time allowed per article 8 minutes; hours worked 170




Answer to above Question:



(a) Material Variances:

(i) Material COST variance: = (Actual quantity x Actual price) less (Standard quantity x Standard price)


(ii) Material PRICE variance=(Actual price less Standard price)x Actual quantity


(iii) Material USAGE variance:=(Actual quantity less Standard quantity)x Standard price



(b) Labor Variances:

(i)Direct WAGES variance=(Actual hours x Actual rate) less (Standard hours x Standard rate)


(ii) Wages RATE variance=(Actual rate less Standard rate)x Actual hours

=($1.95-$1.80) x 170=$0.15×170=$25.50(A)

(iii) Labor EFFICIENCY variance=(Actual hours less Standard hours) x Standard rate

=(170-136) x $1.80=$61.20(A)



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