getting variance amounts in payslip

[Former Member]

I am geeting variance of 136 rupees in net pay.

[Former Member]

you can also look here for some more details.

http://www.slideshare.net/abdulrahmanabdulrahim/sap-fico-questions-and-answers

[Former Member]

Material Cost Variance is the difference between the actual cost of direct materials usedand standard cost of direct materials specified for the output achieved.This variance results from differences between quantities consumed and quantities ofmaterials allowed for production and from differences between prices paid and pricespredetermined.Can be computed using the formula: Material Cost Variance = (SQ x SP) – (AQ x AP) where, AQ = Actual Quantity AP = Actual Price SQ = Standard Quantity for the actual output SP = Standard Price

• Example 1Product A requires 10 kgs of material at the rate of Rs. 4 per kg. The actual consumption ofmaterial for the manufacturing of Product A came to 12 kgs of Material at the rate of Rs.4.50 per kg. Calculate Material Cost Variance.Solution:Material Cost Variance = Standard Cost for Actual Output – Actual Cost = (SP x SQ) – (AP x AQ) = (4 x 10) – (4.50 x 12) = 40 – 54 = Rs. 14 (Unfavourable or Adverse)
• Example 2The standard material and standard cost per kg of material required for the production ofone unit of Product A is: Material 5kg @ Rs. 5 per kg. The actual production and related data are: 400 units of Product A, Material used 2200 kgs @ Rs. 4.80 per kg.Calculate Material Cost VarianceSolution:SQ for actual output = 400 units x 5 kg = 2000 kgMaterial Cost Variance = Standard Cost for Actual Output – Actual Cost = (SP x SQ for actual output) – (AP x AQ) = (5 x 2000) – (4.80 x 2200) = 10,000 – 10,560 Rs. 56 (Unfavourable or Adverse)

A Materials Price Variance occurs when raw materials are purchased at a price differentfrom standard price.It is that portion of the direct materials which is due to the difference between actual pricepaid and standard price specifiedCan be computed using the formula: Material Price Variance = (Standard Price – Actual Price) x Actual QuantityThis variance is unfavourable when the actual price paid exceeds the predeterminedstandard price.It is advisable that materials price variance should be calculated at the time of materialspurchase rather than when materials are used. This is quite beneficial from the viewpoint ofperformance measurement and corrective action.

• Example 3Compute the Material Price Variance from the following data: Standard Material cost per unit Materials Issued Material A 2 pieces @ Re.1.00 = 2.00 Material A 2050 pieces Material B 3 pieces @ Rs. 2.00 = 6.00 Material B 2980 piecesAssume Material A was purchased at the rate of Re. 1.00 and Material B at the rate of Rs.2.10Solution: Material Price Variance = (Standard Price – Actual Price) x Actual qty. Material A = (1.00 – 1.00) x 2,050 = Zero Material B = (2.00 – 2.10) x 2,980 = Rs. 298 (Unfavourable)