Page 200 - DCOM302_MANAGEMENT_ACCOUNTING

Unit 9: Variance Analysis

Standard cost of revised standard mix: Notes

` `
X 6,420 kg. @ ` 8 51,360
Y 4,280 kg. @ ` 10 42,800 94,160
Standard cost of actual mix:
X 5,900 kg. @ ` 8 47,200
Y 4,800 kg. @ ` 10 48,000 95,200
Material mix variance (Difference) 1,040 (A)

The net usage variance will be ` 7,200 less ` 1,040 or ` 6,160 as proved below:
`
X (6,420 – 6,000) x ` 8 3,360 (A)
Y (4,280 – 4,000) x ` 10 2,800 (A)
6,160 (A)

Self Assessment

Choose the correct answer:

6. Variance is identified in between
(a) Standard and budgeted fi gures
(b) Standard and actual fi gures

(c) Budgeted figures and actual
(d) None of the above
7. Variance is/are
(a) Cost variance
(b) Revenue variance
(c) Expense variance

(d) Both (a) & (b)
8. Cost variance is classifi ed into
(a) Material variance
(b) Labour variance

(c) Expense variance
(d) (a), (b) & (c)
9. Variance analysis is for
(a) Cost planning
(b) Cost control

(c) Identification of variance and control deviations

(d) None of the above

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