- This topic has 3 replies, 2 voices, and was last updated 7 years ago by
John Moffat.
John Moffat.-
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sasha
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sir basically material usage variance means that have we used materials more or less than expected. the formula is: actual units*budgeted kg per unit – actual kg used . why expected materials (kg) does not mean budgeted units*budgeted kg per unit . I am confused why actual units used instead of budgeted units.
John Moffat
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Sasha, have you watched all of the lectures?
The reason for calculating the variances is to be able to measure the performance of the relevant managers.
If we produce more units that budgeted then we would expect to use more materials. Is it not the fault of the manager in charge of materials that we produced more units. Therefore we compare the materials actually used with the materials that should have been used for the actual production.
I guess that you were exempt from Paper F2 (because all the basic variances are examined in F2 and F5 is revision). It would help you therefore to watch the relevant F2 lectures.
sasha
- Topics: 99
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thank u sir 🙂
John Moffat
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You are welcome 🙂
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