<Return to Index>

Variances Samples

Plan 60,000 casings a year, direct labour hours 120,000 hours, FOH 360,000 a year

Standard	Cost data
Direct material 0.4 sq m meter @ $20 per sq m	$8.00
Direct Labour 2 hours @ 10 per Hour	20.00
Flexible OH $1.50 per direct labour hour / $3 a Unit
Fixed OH $30,000 @ month / $3 per direct hour

Actual 6000 cases produced	Cost data
Direct material used @ $22 per sq m	2280
Direct Labour @ 10.10 per Hour	11000 hours
Flexible OH	$17200
Fixed OH	$ 32500

	mfg	per unit	$$ per unit	Total Qty	Total $$
Material
Standard	6000	.40 mtrl	$20 sq m	2400 mtrl	48000
Actual	6000	.38 mtrl	$22 sq m	2280 mtrl	50160
						2160 adverse
Labour
Standard	6000	2 hour	$10.00	12000 hours	120000
Actual	6000	1.84 hour	$10.10	11000 hours	111100
						8900 favorable
Flexible OH
Standard	6000	2 hour	$1.50	12000 hours	18000
Actual	6000			11000 hours	17200	800 favorable
Actual @ Std Cost			$1.50	11000 hours	16500
Fixed OH
Budgeted Standard	6000	2 hour	$3.00	10000 hours	30000
Standard	6000	2 hour	$3.00	12000 hours	36000
Actual	6000			11000 hours	32500
						3500 favorable

Calculated based on information provided

Material Variances

Material Efficiency Variance (Standard Quantity – Actual Quantity) Standard Price

[(6000x.4)-2280)]x20

(2400-2280)x20

120x 20

2400 favorable

Material Price Variance (Standard Price – Actual Price) Actual Quantity

(20-22)x2280

2x2280

4560 adverse

Labour Variances

Labour Efficiency Variance (Standard Hours – Actual Hours) Standard Rate

[(2x6000)-((1.84x6000)]x10

(12000-11000)x10

1000x 10

10000 favorable

Labour Rate Variance (Standard Rate– Actual Rate) Actual Hours

(10-10.10)x11000

.10x11000

1100 adverse

Variable Overhead Variances

Variable OH Efficiency Variance Standard Cost of flexible budget time allowance for units produced –

Standard Cost of actual time taken for units produced.

(6000x2x1.50) – (11000x 1.50)

18000 - 16500

1500 favorable

Variable Spending Variance Standard Cost of actual time taken for units produced – Actual cost incurred

(11000x1.50)- 17200

16500 - 17200

700 adverse

Fixed Overhead Variances

Fixed OH Spending Variance Budgeted Amount – Actual Amount

30,000 - 32500

2500 adverse

Fixed OH Denominator Variance Budgeted Amount – Amount applied to units produced

30,000 - (6000X2X3)

30,000 - 36000

6000 favorable

Sales Variances Data

	Chicago Inc	Stuttgart Werke	Total
Units	200	300	500
	$$	$$	$$
Sales	100000	225000	325000
Variable cost	55000	165000	220000
Contribution Margin	45000	60000	105000
Contribution per unit	225	200
Actual Results
Units	250	325	575
	$$	$$	$$
Sales	127500	235625	363125
Variable cost	68750	178750	247500
Contribution Margin	58750	56875	115625
Contribution per unit	235	175

Calculated based on information provided

Sales Variances

Contribution Variance Difference in Contribution margin per unit x Actual Sales Units

Chicago Inc	(235-225)x250	Stuttgart Werke	(175-200)x325
	10 x 250		25 x 325
	2500 favorable		8125 adverse
Total =	5625 adverse

Volume Variance (Actual Sales – Budgeted Sales) x Budgeted Contribution Margin per Unit

Chicago Inc	(250-200)x22	Stuttgart Werke	(325-300)x200
	50x225		25 x 200
	11250 favorable		5000 favorable
Total =	16250 favorable

<Return to Index>