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A company made a product called Bark. Bark had a standard direct material cost in the budget of: 2.5 kg of Material X at $4 per kg = $10 per unit. The average market price for Material X during the period was $5 per kg, and it was decided to revise the material standard cost to allow for this. During the period, 8,000 units of Bark were manufactured. They required 22,000 kg of Material X, which cost $123,000.
Required
Calculate the adverse material usage operational variance
in the bpp kit this answer has been solved by taking the std price/kg of $4 instead of revised std price/kg of $5, could you please explain why as operational variance is found by taking actual results and revised budget into accountAlthough, as I explain in my free lectures, there are two ways of calculating planning and operational variances (that give different answers).
The BPP answer has done it the way that the current examiner prefers, which is the way I explain in my free lectures.Yes it is (and again, I say this in my free lecture!!), but the method the examiner prefers is easier.
No it isn’t (but you must know that the answer is not $22,000, because the Revision Kit tells you what the correct answer is !!)
(I assume that you do have a Revision Kit. If not then it is essential that you buy one – you will not pass the exam without lots of practice on both past exam and other exam-standard questions. The Revision Kit is full of both.)
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