Financial Performance HELP!

beavis182

Hello, am stuggling with this unit and on a certain question where I have lots of figures written down and I need to put it all into standard, actual and a variance column..

Basically the question details
Cast Stone 10kg @ £20.00 = £200.00

800 Units were produced but 1000 were budgeted
Costs actual costs incurred is

Cast Stone 7800kg £159900

I need to work out the
Cast stone total cost (standard, actual and variance)
Cast stone usage (standard, actual and variance)
Cast stone price (standard, actual and variance)

Where do i start????

Woooof

Do you want to know how to start the question or answers with workings?

beavis182

How to start it really. The answers I have so far is

Budget Actual
Product 800 1000
Kilos 7800 10000
Cost 159900 200000

199875-205000 = 5125 adverse variance

I have 9.75 kilos and a standard price of £20.50 per unit.

Is this even close to being right? Not please can you advise me :-)

Woooof

Standard total cost: This is the standard cost to produce the actual units
Actual total cost: This is the actual cost to produce the actual units
Variance: Difference (Favourable/Adverse)

Standard usage: This is the standard amount of cast stone (Kgs) to produce the actual units * standard cost
Actual usage: This is the actual amount of cast stone (Kgs) * standard cost
Variance: Difference (Favourable/Adverse)

Standard Price: Standard price * actual amount of cast stone used (Kgs)
Actual Price: Actual cost of amount of cast stone used (Kgs)
Variance: Difference (Favourable/Adverse)

Total cost variance = Usage variance + Price variance

beavis182

So i have to work off 800 units which is the actual units not budgeted units.

Standard Actual variance
160000 159900 100 total cost
24000 23650 350 usage
25600 27150 1550 price

Is this right?

beavis182

Nope, sorry using the wrong figures completely there...

Woooof

Standard usage: 10kgs (standard amount of cast stone) * 800 (actual units) * £20.00 (standard cost)
Actual usage: 7800 Kgs (actual amount of cast stone) * £20.00 (standard cost)
Variance: Difference (Favourable/Adverse)

Standard Price: £20.00 (standard price) * 7800Kgs (actual amount of cast stone used)
Actual Price: £159,900 (actual cost of cast stone used)
Variance: Difference (Favourable/Adverse)

crispy

Hi,

Total Material Variance:
Standard: 800 Units * £200 = 160,000
Actual: £ 159,900
Variance = 100 (F)

Material Price Variance:
Standard: 7,800 Kgs * £ 20 = 156,000
Actual: 7,800 Kgs * £ 20.50 = 159,900
Variance = 3,900 (A)

Material Usage Variance:
Standard: 800 Units * 100Kgs = 8,000 Kgs * £ 20 = 160,000
Actual: 7,800 Kgs * £ 20 = 156,000
Variance = 4,000 (F)

To prove out:
Material Price Variance 3,900 (A)
Material Usage Variance 4,000 (F)
= Total Material Variance 100 (F)

SusieQtips

beavis182, woooof and crispy

Just want to say a really big thank you to beavis for asking this question and to woooof and crispy for your replies.

I have been struggling with this for weeks, I just couldn't work out which figures I needed to be using and nothing would make it click.

Your explanation Woooof has just made it click for me. I am soooooooo grateful to you three.

beavis182

Yes thank you very much for your replies as I was totally lost trying to work that out but now you have explained it, it looks much simplier :-)