T he following information was taken from the books of MEHRAN MANUFACTURING CO.: STANDARD ACTUAL Material 5,000 kg @ Rs. 10 4,800 kg @ 10 Labour 1,000 Hours @ Rs. 18 1,200 Hours @ 16 Factory Overhead Rs. 3,000 Rs. 3,600
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Question – 2
T he following information was taken from the books of MEHRAN MANUFACTURING CO.:
STANDARD ACTUAL
Material 5,000 kg @ Rs. 10 4,800 kg @ 10
Labour 1,000 Hours @ Rs. 18 1,200 Hours @ 16
Factory
Required: 1] Compute the Following: a) Material Price Variance
b) Material Quantity Variance c) Labour Rate Variance
d) Labour efficiency variance e) Overhead Variance
2] Prepare the
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