VARIANCES ANALYSIS PRACTICE QUESTIONS

Question 1
Standard Cost for Product RBT

	£
Materials (10kg x £8 per kg)	80
Labour (5hrs x £6 per hr) ¬	30
Variable O/Hds (5hrs x £8 per hr)	40
Fixed O/Hds (5hrs x £9 per hr)	45
	195

Budgeted Results
Production	10000 units
Sales	7500 units
Selling Price	£300 per unit

Actual Results
Production	8000 units
Sales	6000 units
Materials	85000 kg Cost £700000
Labour	36000 hrs Cost £330900
Variable O/Hds	£400000
Fixed O/Hds	£500000
Selling Price	£260 per unit

Calculate

1. Material total variance
2. Material price variance
3. Material usage variance
4. Labour total variance
5. Labour rate variance
6. Labour efficiency variance
7. Variable overhead total variance and all sub- variances
8. Fixed Production overhead total Variance and all sub-variances
9. Selling price variance
10. Sales volume variance

Question 2

Standard Cost for Product TUH
	£
Materials (10kg x £8 per kg)	80
Labour (5hrs x £6 per hr) ¬	30
Variable O/Hds (5hrs x £8 per hr)	40
Fixed O/Hds (5hrs x £9 per hr)	45
	195

Budgeted Results
Production	11000 units
Sales	7500 units
Selling Price	£300 per unit

Actual Results
Production	9000 units
Sales	7000 units
Materials	85000 kg Cost £700000
Labour	36000 hrs Cost £330900
Variable O/Hds	£410000
Fixed O/Hds	£520000
Selling Price	£260 per unit

Calculate

1. Material total variance
2. Material price variance
3. Material usage variance
4. Labour total variance
5. Labour rate variance
6. Labour efficiency variance
7. Variable overhead total variance and all sub- variances
8. Fixed Production overhead total Variance and all sub-variances
9. Selling price variance
10. Sales volume variance

Question 3

Standard Cost for Product TD
	£
Materials (10kg x £5 per kg)	50
Labour (5hrs x £6 per hr) ¬	30
Variable O/Hds (5hrs x £8 per hr)	40
Fixed O/Hds (5hrs x £9 per hr)	45
	165

Budgeted Results
Production	8000 units
Sales	7500 units
Selling Price	£300 per unit

Actual Results
Production	11000 units
Sales	10000 units
Materials	85000 kg Cost £700000
Labour	36000 hrs Cost £330900
Variable O/Hds	£400000
Fixed O/Hds	£500000
Selling Price	£320 per unit

Calculate

1. Material total variance
2. Material price variance
3. Material usage variance
4. Labour total variance
5. Labour rate variance
6. Labour efficiency variance
7. Variable overhead total variance and all sub- variances
8. Fixed Production overhead total Variance and all sub-variances
9. Selling price variance
10. Sales volume variance

Question 4

Standard Cost for Product WXYZ
	£
Materials (4kg x £8 per kg)	32
Labour (5hrs x £10 per hr) ¬	50
Variable O/Hds (5hrs x £8 per hr)	40
Fixed O/Hds (5hrs x £6 per hr)	30
	152

Budgeted Results
Production	10000 units
Sales	7500 units
Selling Price	£300 per unit

Actual Results
Production	8000 units
Sales	6000 units
Materials	85000 kg Cost £700000
Labour	36000 hrs Cost £330900
Variable O/Hds	£400000
Fixed O/Hds	£500000
Selling Price	£260 per unit

Calculate

1. Material total variance
2. Material price variance
3. Material usage variance
4. Labour total variance
5. Labour rate variance
6. Labour efficiency variance
7. Variable overhead total variance and all sub- variances
8. Fixed Production overhead total Variance and all sub-variances
9. Selling price variance
10. Sales volume variance

Question 5

Standard Cost for Product RTY
	£
Materials (10kg x £8 per kg)	80
Labour (5hrs x £6 per hr) ¬	30
Variable O/Hds (5hrs x £8 per hr)	40
Fixed O/Hds (5hrs x £9 per hr)	45
	195

Budgeted Results
Production	13000 units
Sales	10000 units
Selling Price	£300 per unit

Actual Results
Production	12000 units
Sales	9000 units
Materials	90000 kg Cost £750000
Labour	40000 hrs Cost £350000
Variable O/Hds	£500000
Fixed O/Hds	£600000
Selling Price	£350 per unit

Calculate

1. Material total variance
2. Material price variance
3. Material usage variance
4. Labour total variance
5. Labour rate variance
6. Labour efficiency variance
7. Variable overhead total variance and all sub- variances
8. Fixed Production overhead total Variance and all sub-variances
9. Selling price variance
10. Sales volume variance

Question 6

Standard Cost for Product RED
	£
Materials (10kg x £7 per kg)	70
Labour (5hrs x £6 per hr) ¬	30
Variable O/Hds (5hrs x £8 per hr)	40
Fixed O/Hds (5hrs x £9 per hr)	45
	185

Budgeted Results
Production	10500 units
Sales	7800 units
Selling Price	£310 per unit

Actual Results
Production	8500 units
Sales	6200 units
Materials	87000 kg Cost £700000
Labour	36000 hrs Cost £330900
Variable O/Hds	£400000
Fixed O/Hds	£550000
Selling Price	£270 per unit

Calculate

1. Material total variance
2. Material price variance
3. Material usage variance
4. Labour total variance
5. Labour rate variance
6. Labour efficiency variance
7. Variable overhead total variance and all sub- variances
8. Fixed Production overhead total Variance and all sub-variances
9. Selling price variance
10. Sales volume variance

Question 7

Standard Cost for Product BUZZ
	£
Materials (3kg x £8 per kg)	24
Labour (5hrs x £10 per hr) ¬	50
Variable O/Hds (5hrs x £9 per hr)	45
Fixed O/Hds (5hrs x £10 per hr)	50
	169

Budgeted Results
Production	10000 units
Sales	7500 units
Selling Price	£300 per unit

Actual Results
Production	8000 units
Sales	6000 units
Materials	85000 kg Cost £700000
Labour	36000 hrs Cost £330900
Variable O/Hds	£400000
Fixed O/Hds	£500000
Selling Price	£260 per unit

Calculate

1. Material total variance
2. Material price variance
3. Material usage variance
4. Labour total variance
5. Labour rate variance
6. Labour efficiency variance
7. Variable overhead total variance and all sub- variances
8. Fixed Production overhead total Variance and all sub-variances
9. Selling price variance
10. Sales volume variance

Question 8

Standard Cost for Product RST
	£
Materials (10kg x £20per kg)	200
Labour (5hrs x £16 per hr) ¬	80
Variable O/Hds (5hrs x £8 per hr)	40
Fixed O/Hds (5hrs x £9 per hr)	45
	365

Budgeted Results
Production	1000 units
Sales	7500 units
Selling Price	£800 per unit

Actual Results
Production	8000 units
Sales	6000 units
Materials	85000 kg Cost £700000
Labour	36000 hrs Cost £330900
Variable O/Hds	£400000
Fixed O/Hds	£500000
Selling Price	£260 per unit

Calculate

1. Material total variance
2. Material price variance
3. Material usage variance
4. Labour total variance
5. Labour rate variance
6. Labour efficiency variance
7. Variable overhead total variance and all sub- variances
8. Fixed Production overhead total Variance and all sub-variances
9. Selling price variance
10. Sales volume variance

Question 9

Standard Cost for Product FGT
	£
Materials (10kg x £8 per kg)	80
Labour (5hrs x £6 per hr) ¬	30
Variable O/Hds (5hrs x £8 per hr)	40
Fixed O/Hds (5hrs x £9 per hr)	45
	195

Budgeted Results
Production	10000 units
Sales	7500 units
Selling Price	£300 per unit

Actual Results
Production	13000 units
Sales	6000 units
Materials	85000 kg Cost £700000
Labour	36000 hrs Cost £330900
Variable O/Hds	£400000
Fixed O/Hds	£500000
Selling Price	£260 per unit

Calculate

1. Material total variance
2. Material price variance
3. Material usage variance
4. Labour total variance
5. Labour rate variance
6. Labour efficiency variance
7. Variable overhead total variance and all sub- variances
8. Fixed Production overhead total Variance and all sub-variances
9. Selling price variance
10. Sales volume variance

Question 10

Standard Cost for Product White Diamond
	£
Materials (7kg x £9 per kg)	63
Labour (6hrs x £9 per hr) ¬	54
Variable O/Hds (6hrs x £6 per hr)	36
Fixed O/Hds (6hrs x £7 per hr)	42
	195

Budgeted Results
Production	12500 units
Sales	8500 units
Selling Price	£500 per unit

Actual Results
Production	15000 units
Sales	8000 units
Materials	8750 kg Cost £85000
Labour	5200hrs Cost £52900
Variable O/Hds	£25500
Fixed O/Hds	£84000
Selling Price	£600 per unit

1. Material total variance
2. Material price variance
3. Material usage variance
4. Labour total variance
5. Labour rate variance
6. Labour efficiency variance
7. Variable overhead total variance and all sub- variances
8. Fixed Production overhead total Variance and all sub-variances
9. Selling price variance
10. Sales volume variance

Sales mix and quantity variances

The sales volume variance can be subdivided into a mix variance if the proportions of products sold are controllable.

Sales mix variance

This variance indicates the effect on profit of changing the mix of actual sales from the standard mix.

It can be calculated in one of two ways.

• The difference between the actual total quantity sold in the standard mix and the actual quantities sold, valued at the standard margin per unit.
• The difference between actual sales and budgeted sales, valued at (standard profit per unit – budgeted weighted average profit per unit)

Sales quantity variance

This variance indicates the effect on profit of selling a different total quantity from the budgeted total quantity.

It can be calculated in one of two ways.

• The difference between actual sales volume in the standard mix and budgeted sales valued at the standard margin per unit.
• The difference between actual sales volume and budgeted sales valued at the budgeted weighted average profit per unit.

KEY. With all variance calculations, from the most basic (such as variable cost variances) to the more complex (such as mix and yield / mix and quantity variances), it is vital that you do not simply learn formulae. You must understand what your calculations are supposed are supposed to show.