Cost

STANDARD COSTING FORMULAE

PCC/IPCC/FINAL

By Urvashi D. Maharshi

urvashimaharshi@gmail.com

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MATERIAL VARIANCES:

Material Cost Variance: (SQ x SP) – (AQ x AP) Material Price Variance: AQ x (SP – AP) Material Usage Variance: SP x (SQ – AQ) Check: MCV = MUV + MPV 4. Material Mix Variance = (RSQ – AQ) x AP SQ of one material Total of Std. Qnty of all materials 5. 6. Material Revised Usage Variance: (SQ x RSQ) x SP Material Yield Variance: (AY – SY) x SOP [Std. O/p Price] Check: MUV = MUV + MPV X Total of actual Qnty of all materials

Where, RSQ (Revised Std. Qnty) =

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LABOUR VARIANCES:

Labour Cost Variance: (SH x SR) – (AH x AR) Labour Rate Variance : AH x (SR – AR) Labour Efficiency (or time) Variance: SR (SH – AH) Check: LCV = LEV + LRV Labour efficiency variance is further divided into the following variances: (i) Idle time variance: Idle hrs x SR (ii) Labour mix variance: (Revised std. hrs. – AH) x SR Labour revised efficiency variance: (SH – RSH) x SR (iii) (iv) Labour yield variance: (AY – SY) x SLC [Std. labour cost per unit of o/p] Check: LEV = ITV + LMV + LYV

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OVERHEAD VARIANCES:

Standard overhead rate (per hr.) = Budgeted o/h Budgeted hrs. OR Budgeted o/h Budgeted o/p in units

Note: Separate o/h rates will be computed for fixed and variable o/hs The basic calculation should be made before computing variances: (i) When overhead rate per hour is used: (a) Std. Hrs. for actual o/p [SHAO]: Budgeted Hrs. X Act. o/p Budgeted o/p (b) Absorbed (or Recovered) o/h: SH for Act. o/p x Std. o/h rate per hr. (c) Std. overhead: AH x Std. overhead rate per hr. (d) Budgeted overhead: Budgeted Hrs. x Std. overhead rate per hr. (e) Actual overhead: Act. Hrs x Actual overhead rate per hr. (ii) When overhead rate per unit is used: (a) Std. output for actual hrs [SOAH]: Budgeted output (in units) X Act. Hrs. Budgeted Hrs (b) Absorbed overhead: Act. o/p x Std. o/h rate per unit (c) Std. overhead: Std. o/p for actual time x Std....