Thursday, July 27, 2017

Cost and Management accounting concept Standard costing MBA material

Variance analysis is the process of analyzing variances by sub-dividing the total variance in such a way that management. Can assign responsibility for any off standard performance.
Variance analysis is the process of computing the amount of variance & isolating the causes of various between actual and standard. An important aspect of variance analysis is the need to separate controllable from an controllable variances.
Favorable &un favorable variances
              Where the actual cost is less than for standard cost is known as favorable (or)credit variances. And the other hands where the actual cost is more than for standard cost is known as unfavorable(or)debit variances.
Cost variance
Cost variance is the diff between standard cost and actual cost incurred during a period . Total cost is divided 3-types
These are:
Material cost variance
Labor cost variance
Over head variance
1.Material cost variance:
          Material cost variance as in divided in to 2 types.
These are:
      Material price variance
      Material usage variance
Material usage variance:
Material usage variance is also dividing in to 2 types.
These are:
      .material mix variance
      .material yield variance
2. labor cost variance:
                                        Labor cost variance is dividing into 2 types.
           
These are:
                                cost variance Labor


              Labor rate                        labor efficiency     
               variance                                 variance

                                         
                                    labor mix      labor yield    idle time
                                       variance           variance      variance


                             LABOR COST VARIANCE







MATERIAL COST VARIANCE:
               

                              MCV=(SQ-SP)-(AQ*AP)
                             
                               SQ=standard quantity
                                Sp=standara price
                               AQ=ACTUAL QUANTITY
                               AP=ACTUAL PRICE
MATERIAL PRICE VARIANCE:                     

                                    MPV   = (SP-SQ)*AQ

MATERIAL USAGE VARIANCE:
  
                                 MUV=(SQ-AP)*SP

MATERIAL MIX VARIANCE:

                                MMV=(RSQ-AQ)*SP
                           
                       RSQ=REVISED STANDARD QUANTITY
                      STANDARDITY OF ONE MATERIAL   *TOTAL OF              RSQ=  TOTAL OF STANDARD QUANTITY OF ALL    A/Q OF                                                                                                                                                      
         MATERIAL                                                     MATERIAL
Material yield variance:
                                      
=(actual yield –standard yield)*standard output

LABOR COST VARIANCE:


                                   LCV=(S.H*S.R)-(A.H*A.R)

ABOUR RATE VARIANCE

 
                                                  LPV=(SR-AR)*AH

LABOR EFFICIENCY VARIANCE:

                                         LEV=(S.H-A.H)*SR

LABOR MIX VARIANCE:


                       LMV=(RSH-AH)*SR

RSH=Revised standard hours
             
            RSH=Standard hours*total actual hours
                      Total standard hours

Labor yield variance:

Lyv=(a.y-s.y from actual output)*S.L cost per unit

IDLE TIME VARIANCE
                   IDLE TIME VARIANCE=IDLE HOURS-STANDARD
                                                                                     RATE