The following data pertaining to a company engaged in manufacturing and sale of a single product during the year: Particulars Budget Actual Sales…

CA Intermediate · Cost and Management Accounting · PYQS · January 2026
The following data pertaining to a company engaged in manufacturing and sale of a single product during the year: Particulars Budget Actual Sales (in units) 60,000 66,000 Sales (₹) 1,80,00,000 2,14,50,000 Direct Materials (₹) 28,80,000 36,30,000 Direct labour (₹) 43,20,000 52,80,000 Variable Overheads (₹) 72,00,000 81,84,000 Additional information is given below: Standard (₹) Actual (₹) Direct Material price per kg 10 8 Direct labour rate per hour 10 12 You are required to calculate: (i) Direct material usage variance (ii) Direct material price variance (iii) Direct labour efficiency variance (iv) Direct labour rate variance (v) Variable overhead cost variance

Suggested Answer and Working Notes:

Budget Revised standard Actual Qty Price Amount (₹) Qty Price Amount (₹) Qty Price Amount (₹) Material 2,88,000 10 28,80,000 3,16,800 10 31,68,000 4,53,750 8 36,30,000 (i) Direct Material Usage Variance = (SQ – AQ) X SP (3,16,800 - 4,53,750) x 10 = 13,69,500 A (ii) Direct Material Price Variance = (SP – AP) X AQ (10 - 8) x 4,53,750 = 9,07,500F Budget Revised standard Actual Hrs Rate Amount (₹) Hrs Rate Amount (₹) Hrs Rate Amount (₹) Labour 4,32,000 10 43,20,000 4,75,200 10 47,52,000 4,40,000 12 52,80,000 (iii) Direct Labor Efficiency Variance = (SH – AH) X SR (4,75,200 - 4,40,000) x 10 = 3,52,000 F (iv) Direct Labor rate Variance = (SR – AR) X AH (10 - 12) x 4,40,000 = 8,80,000 A (v) Variable overhead cost Variance = (Variable overhead for actual output - Actual Variable overheads) (72,00,000 x 66,000 / 60,000 - 81,84,000) = 2,64,000 A

Topics: Standard Costing

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