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a company manufactures a single product. An extract from a variance control report together with relevant standard cost data is shown below.
standard s.p per unit $70
Standard d.m cost(5kg * $2per kg) $10 per unit
Budgeted total material cost of sales $2300 per month
budgeted profit margin $6900 per monthActual results
sales revenue $15200
Total direct material cost $2400
DMPV $800 adverse
DMUV $400 favourableno change in inventory levels
Q1 what was the actual production in february??
A 200 B 217 C 240 D 280Q2 what was the actual usage of direct material during february??
A 800kg B 1000 C 1200 D none of theseQ3 what was the SPV for february??
A $120F B 900A C1200A D1200FQ4 what was the sales volume profit variance??
A$900F B1200F C900A D2100Ai’m having difficulties with the workings :/
Q1: if actual material cost is 2400, then standard material cost will be 2400 – 800 + 400 = 2000.
Standard cost per unit is $10. So number of units is 2000/10 = 200.Q2: Standard usage for actual production = 200 x 5kg = 1000 kg.
Usage variance is $400 favourable. Since standard cost per kg is $2 it means that they used 400/2 = 200 kg less than standard. 1000 – 200 = 800 kg.Q3: Since there is no change in inventory, sales units = production = 200 units.
At standard selling price should be 200 x $70 = 14000.
Actual revenue is 15200.
So variance is 1200 (F)Q4: Budget production and sales = 2300/10 = 230 units.
Standard profit per unit = 6900 / 230 = $30 per unit.
Actual sales are 200 units.
So sales volume variance = 30 units x $30 = $900 (A)
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