- This topic has 6 replies, 3 voices, and was last updated 7 years ago by John Moffat.
Viewing 7 posts - 1 through 7 (of 7 total)
Viewing 7 posts - 1 through 7 (of 7 total)
- You must be logged in to reply to this topic.
Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>
Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Material usage variance
Hi,
Could you please help me with Kaplans excercise 248?
The following info relates to April production of product CK:
Actual Budget
Units produced 580 600
Input of materials (kg) 1,566 1,500
Cost of materail purchased
and input $77,517 $76,500
How to calculate the materials usage variance?
Thank you in advance for your help!!
Kind regards
Using budget figures, the standard usage is 1500/600 = 2.5 Kg per unit, and the standard cost is 76500/1500 = $51 per kg.
For the usage variance you compare the actual usage (1566kg) with the standard usage for the actual production (580 units x 2.5kg) 1450 kg.
So they used 116 kg (1566 – 1450) more than they should have. You cost this out at the standard cost per kg, so the variance is 116 x $51 = $5,916 adverse.
I do suggest that you watch the free lectures on variances, which explain all of the variances.
isnt the formula for materials usage variance
(standard quantity- actual quantity)standard cost
where standard quantity is (actual output*rate)
the answer should then be -$5196 or adverse
thank you sorry i had misread
You are welcome 🙂
Thank soo much. 🙂
You are welcome 🙂