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the stnd direct material cost per unit for a product was as follows :
10.5 litres at $2.50 per litres.last month the actual price paid for 12000 litres of material was 4% above stnd and the direct material usage variances was $1815 favourable . no stocks of material are held .
1- what was the adverse direct material price variance for the last month ?
2-what was the actual production last month in units ?i do watched all the lectures and i was able to do other question but few question i was not able to do . so please solve the above two questions
Thank You !!!1) The standard price for 12000 litres is 12000 x 2.50 = 30,000.
If the actual price was 4% above standard then they must have actually paid 4% x 30,000 = 1200 extra. This therefore is the material price variance.
2) If the material usage variance is 1815, then the standard usage for the actual production must have been 1815/2.50 = 726 litres more than the actual usage.
So the standard usage for actual production must have been 12000 + 726 = 12726
Since standard usage is 10.5 litres per unit, the actual production must have been 12726 / 10.5 = 1212 units.can u explain the 2nd question in another way as i didnt understand the way you did .
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