BG company produces a standard product and sold in a packet of 10 kg. The standard cost card per pack is as follows: Direct Material: A - 4 kg @50…

Budget Actual Qty. (Kg.) [SQ] Price (₹) [SP] Amount (₹) [SQ x SP] Qty. (Kg.) [AQ] Price (₹) [AP] Amount (₹) [AQ x AP] A 6,400 50 3,20,000 7,000 40 2,80,000 B 12,800 40 5,12,000 12,500 45 5,62,500 19,200 8,32,000 19,500 8,42,500 Material Cost Variance = (SQ X SP – AQ X AP) = 8,32,000 - 8,42,500 = 10,500 (A) Material Price Variance = (SP – AP) x AQ A (₹ 50 - 40) × 7,000 Kg = 70,000 (F) B (₹ 40 - 45) × 12,500 Kg = 62,500 (A) 7,500 (F) Material Usage Variance = SP x (SQ – AQ) A - 50 × (6,400 Kg – 7000 Kg) = 30,000 (A) B - 40 × (12,800 Kg – 12,500 Kg) = 12,000 (F) 18,000 (A) Material Mix Variance = (RSQ - AQ) X SP A = (6,500 Kg – 7,000 Kg) x 50 = 25,000 (A) B = (13,000 Kg – 12,500 Kg) x 40 = 20,000 (F) 5,000 (A) Material Yield Variance = (SQ – RSQ) X SP A = (6,400 Kg – 6,500 Kg) x 50 = 5,000 (A) B = (12,800 Kg – 13,000 Kg) x 40 = 8,000 (A) 13,000 (A) Labour Standard Hours for actual Production = 6 Hours X 1,600 Units = 9,600 Hours Labour Cost Variance = (SH X SR – AH X AR) = 9,600 hrs x 20 – {(6,000 hrs x 25) + (4,000 hrs x 20)} = 1,92,000 - 2,30,000 = 38,000 (A) Labour Rate Variance = (SR – AR) X AH = (₹ 20 -25) x 6,000 hrs = 30,000 (A) Efficiency Variance = (SH – AH worked) x SR = (9,600 hrs – 9,500 hrs) x 20 = 2,000 (F) Idle time Variance = Idle Hours X SR = (AH – AH#) × SR = (10,000 hours – 9,500 hours) x 20 = 10,000 (A) AH# refers to Actual Hours Worked