Standard costing doubt

material price variance-this is the difference in cost that results from price being different to standard. it is therefore the difference in price multiplied by actual usage.the formula is price difference *actual quantity. or (standard price-actual price)*actual quantity. or standard price * actual quantity-actual price *actual quantity.or standard cost of actual quantity -actual cost.     therefore mpv= 10-12*20000=40000(A)                                              material usage variance-the material usage variance is the difference between actual usage and expected usage (i.e.what should have been used to produce the actual output ) multiplied by the standard price .the formula is usage difference * standard price or (standard usage-actual usage)*standard price or( standard usage*standard price) - ( actual usage*standard price  ) or standard cost of standard quantity -standard cost of actual  quantity.therefore(18000*10)-(20000*10 )=180000-20000=20000(A)                                  

PRICE VARIANCE = (SP-AP)AQ OR SP*AQ -AP*AQ

                                  = 10*18000 - {(12*20000)+(20*5000)}

                                  = 180000-(240000+100000)

                                  = 180000-340000 = 160000 (A)

USAGE VARIANCE = (SQ-AQ)SP

                                   = (18000-25000)10

                                   = 7000*10 =70000 (A)

COST VARIANCE = 160000+70000=230000 (A)

IF DIFFERENT PLEASE FEEL FREE TO ASK.................

@ sidhant ...

I didn't understand why you haven't taken 5000 kg in consideration as well ....

@ Rajnikant Sir

You hav already calculated the material cost variance in price variance.

the actual answers are :-

Material price variance :-  110,000 (A)

Usage variance :- 50,000 (A)

MCV is 160000 (A) which is correct but I am unable to cal price n usage variance .

DEAR RENU,

 IS THERE ANY DIFFERENCE IN OUTPUT CAN U GIVE ME MORE DETAILS...............

@ rajnikant Sir

I have pasted the whole question. There are no further details in the question.

I was thinking that there should be some different treatment for  emergancy purchase, thats y my answer is not matching with the book.

YES U R RIGHT I ASSUME SAME I'LL COME TO U SOON..........

Solution:

Material Price Variance = (S.P. – A.P.) × A.S.

= (10 – 12)×20,000 + (10 – 12)×5,000

=50,000 Adverse

Material Usage Variance = Excess price variance + (S.Q. – A.Q.)×S.P.

due to emergency order 

= (12 – 20)×5,000 + (18,000 – 25,000)×10

=1,10,000
.
Note: Solution copy pasted from

(https://www.scribd.com/doc/109714785/38-Standard-Costing)

YES I AGREE WITH DEEPAK....

Originally posted by : |)eep @ k Gupt/\
	Solution: Material Price Variance = (S.P. – A.P.) × A.S. = (10 – 12)×20,000 + (10 – 12)×5,000 =50,000 Adverse Material Usage Variance = Excess price variance + (S.Q. – A.Q.)×S.P. due to emergency order  = (12 – 20)×5,000 + (18,000 – 25,000)×10 =1,10,000 . Note: Solution copy pasted from (https://www.scribd.com/doc/109714785/38-Standard-Costing)

Agreed with this answer.............

In my opinion answer is:-

MPV=(SP-AP)*AQ

5000*(20-10)=50000(A) -- Emergency purchases --Liability of Production manager,no fault of Purchase Manager

20000*(12-10)=40000(A)-- Regular purchases-Liability of Purchase Manager.

MUV=(SQ-AQ)SP

(25000-18000)*10=70000(A) -- Liability of Production Manager.

MUV:- (18k - 25k) X 10 = (70k)

MPV:- (25k X 10) - [(20k X 12) + (5k X 20)] = (90k)

Arvind your solution correct

Thanks Deepak for providing the solution and

once again thanks to all for anticipating in the discussion and letting me about every aspect of the question.