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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 $76,500How to calculate the materials usage variance?
Thank you in advance for your help!!
Kind regardsUsing 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
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