Standard Costing

Question 1

Direct Material Total Variance

Answer 1

Standard cost - Actual cost
Difference between
- Std DM cost of Actual Production
- Actual cost of Direct Material

[ (SQ x SP) - (AQ x AP)

Question 2

Direct Material Price Variance

Answer 2

Standard cost of Actual qty - Actual Cost
Difference between
- Standard Price for Actual qty
- Actual price for Actual qty
(SP - AP) x AQ

Question 3

Direct Material Usage Variance

Answer 3

Std cost of Std Qty for Act Prod - Std Cost of Act Qty
Difference between
- Std Qty for Actual prodn
- Actual Qty used at std price
[(SQ - AQ) x SP]

Question 4

Direct Material Mix Variance

Answer 4

Std cost of Act Qty in Std Proportion - Std cost of Act Qty
Difference between
- Actual qty in std proportion
- Actual qty in Actual proportion
[(RAQ - AQ) x SP]
or
Total AQ (units) x { Avg Std Price per unit of Std Mix - Avg Std Price per unit of Actual mix}

Question 5

Direct Material Yield Variance

Answer 5

Std cost of std qty for Actual prdn - Std cost of Act qty in Std proportion
Difference between
- Std qty specified for actual production at SP
- Actual qty in standard production at SP
[(SQ - RAQ) x SP]
or
[Avg Std price per unit of Std Mix ] x {Total Std Qty - Total Actual Qty}

Question 6

Material Purchase price variance

Answer 6

[Std cost of Actual Qty - Actual Cost]
Difference between
- Standard price
- Actual price
for actual qty of material purchased
[(SP - AP)] x PQ