- This topic has 3 replies, 2 voices, and was last updated 9 years ago by
.
- Posts
The following data relates to Product Z and its raw material content for September:
Budget:
Output 11,000 units of Z
Standard materials content 3kg per unit at $4 per kg
Actual:
Output 10,000 units of Z
Meterials purchased and used 32,000kg at $4.80 per kgIt has now been agreed that the STD price for the raw material purchased in September should have been $5 per kg.
Question 1: Materials Planning Price Variance
I used as a base the actual purchase 32,000 kg and got the answer $32,000A. The book used 30,000kg (As per budget for actual production) so $30,000A.
Am I wrong using the Actual purchase?
Question 2: Materials Operational Usage Variance
My answer
(32000-30000) x 4 = 8000A
Book
32000-3000 x $5 = 10,000AMsybe I should have used the revised cost per kg but in a different example comparing 3 different quantities (Budget, revised and actual) I used the budget cost and it worked. Can you clarify it to me, please?
The problem is that there are two different ways of doing this. They give different answers, but either way gets full marks.
If you are using current editions of the books then they will do it the way that the current examiner prefers. If you are using last years editions, then they will do it the way that the current examiner prefers.
It is your choice – either way will get full marks (our lectures do it the way that the current examiner prefers, which is the easiest way as well).
Eh some good news!
But if it’s in a multiple choice question, it will be wrong choosing differently, no? Or would they consider?
- You must be logged in to reply to this topic.