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Saw this question in BPP:
The standard cost of the actual quantity of raw material G issued to production was 150.000 USD.
The materials usage variance = $10,000 Fav
Materials price variance= $30,000 Adv.The increase in raw materials inventory was $10,000 at standard cost.
What was the amount spent on purchases of raw materials for the period??
a. 160 000
b. 170 000
c 180000
d 190000HELP!
The standard cost of the actual purchases is 150000 + 10000 = 160000
There is an adverse price variance, so the actual cost of the actual purchases will be 160000 + 30000 = 190.000
Thanks. I arrived at the same answer, but I was skeptical about how the usage variance fits in here
Mr John, why is standard cost of the actual purchases 160,000 when it says ‘ The standard cost of the actual quantity was 150.000′
I don’ understand why we do not 150,000-10,000=140,000 to get The standard cost of the actual purchases
pls guideIt says that the standard quantity issued to production is 150,000.
It also says that inventory is being increased.So the amount to buy is the amount needed for production plus the amount needed to increase the inventory.
Hi Sir
I don’t understand why it’s 150 000 + 10 000.
I did
mat price variance= 150 000-X= -30 000x= 180 000 ( X= atual materials * standard purchase price)
then add actual issues to increase inventory.
180 000 +10 000= 190 000.just want to know if its right and can do this way.
In relation to a manufacturing company, are the following true or false?
A factory canteen is always a cost centre
A cost center is the location where all the paperwork for costing system is accumulated
Please start a new thread if you are asking a question about something different.
In answer to your question, they are both false.
A canteen may well be a cost centre, but if they charge employees for the food then it could be a profit centre instead.
The second one is obviously false 🙂
The standard cost of raw materials issued for production was 150000
Usage variant 10000 favourable
Price VARIANCE was 30000 adverse
Increase in raw material inventories was 10000
What was the actual spent on raw materialsWhy on earth are you attempting questions for which you do not have an answer? You should be using a Revision Kit from one of the ACCA approved publishers – they have answers and explanations!
Assuming that the increase in raw materials is $10,000 and not 10,000 units, then $180,000.
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