Daily Answer Writing Practice for Commerce Optional UPSC (Mains)- Day 64

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Topic – Standard Costing

#Q.1) The following information is available from the cost records of Vatika & Co. For the month of August, 2013:

Material purchased 24,000 kg  Rs. 1,05,600 Material consumed 22,800 kg

Actual wages paid for 5,940 hours  Rs.29,700 Unit produced 2,160 units.

Standard rates and prices are:

Direct material rate is Rs. 4.00 per unit

Direct labour rate is Rs. 4.00 per hour Standard input is 10 kg. for one unit

Standard labour requirement is 2.5 hours per unit.

Calculate all material and labour variances for the month of August, 2013.



#Q.2) The standard labour employment and the actual labour engaged in a 40 hours week for a job are as under:



Category of Workers

Standard Actual
No.           of workers Wage Rate per hour ( Rs.) No.               of workers Wage       Rate per hour (Rs.)
Skilled 65 45 50 50
Semi-skilled 20 30 30 35
Unskilled 15 15 20 10

Standard output: 2,000 units; Actual output: 1,800 units Abnormal Idle time 2 hours in the week


(i) Labour Cost Variance

(ii) Labour Efficiency Variance

(iii) Labour Idle Time Variance.


#Q.3) SJ Ltd. has furnished the following information:

Standard overhead absorption rate per unit Rs. 20
Standard rate per hour Rs. 4
Budgeted production 12,000 units
Actual production 15,560 units

Actual overheads were  Rs. 2,95,000 out of which Rs. 62,500 fixed . Actual hours 74,000

Overheads are based on the following flexible budget

Production (units) 8,000 10,000 14,000
Total Overheads (Rs.) 1,80,000 2,10,000 2,70,000

You are required to calculate the following overhead variances (on hour’s basis) with appropriate workings:

(i) Variable overhead efficiency and expenditure variance

(ii)Fixed overhead efficiency and capacity