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A COMPANY has a budgeted material cost of $125000 for the production of 25000 units per month .Each unit is budgeted to use 2kg of material.The standard cost of material is $2.50 per kg
Actual materials in the month cost $136000 for 27000 units and 53000 kg were purchased and used.
WHAT IS TH E MATERIAL USAGE VARIANCE?
sir i got 7500(a) but in the revision kit the answer is 2500(f)
can you please explain the answerYour cost card would be :
2 kg/unit @ $2.50 = $5/ unit
You were asked to look for material usage, so would be,flexed (2 kg x 27000) = 54000kg
actual = 53000 kg ( given in the info alrdy)
———-
1000kg favourable
x $ 2.50
———–
$2,500 favourable
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