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I’m stuck with this question:
“For product DR, the material price variance for the month of August was $1000 favourable and the material usage variance was $300 adverse.
The standard material usage per unit is 3kg, and the standard material price is $2 per kg. 500 units were produced in the period. Opening inventory of raw material were $100 kg and closing inventory 400kg.What is the material purchase in the period?
The answer is 1950 kg but i don’t know how to get it… Can someone or the tutor explain how to proceedThe standard usage for actual production is 500 x 3kg = 1,500 kg.
Since there is an adverse usage variance, the actual usage of material is 1,500 + 300/2 = 1,650 kg.
There is opening inventory of 100 kg and closing inventory of 400 kg, so the actual purchases must have been 1,650 + 400 – 100 = 1,950 kg
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