Financial Performance HELP!

beavis182
beavis182 Registered Posts: 130 Dedicated contributor 🦉
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????

Comments

  • Woooof
    Woooof Registered Posts: 174 Dedicated contributor 🦉
    Do you want to know how to start the question or answers with workings?
  • beavis182
    beavis182 Registered Posts: 130 Dedicated contributor 🦉
    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
    Woooof Registered Posts: 174 Dedicated contributor 🦉
    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
    beavis182 Registered Posts: 130 Dedicated contributor 🦉
    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
    beavis182 Registered Posts: 130 Dedicated contributor 🦉
    Nope, sorry using the wrong figures completely there...
  • Woooof
    Woooof Registered Posts: 174 Dedicated contributor 🦉
    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
    crispy Registered Posts: 466 Dedicated contributor 🦉
    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
    SusieQtips Registered Posts: 65 Regular contributor ⭐
    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
    beavis182 Registered Posts: 130 Dedicated contributor 🦉
    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 :-)
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