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Usage variance example

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Usage variance example

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
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  • Author
    Posts
  • March 6, 2021 at 11:04 am #613735
    wilder
    Member
    • Topics: 30
    • Replies: 21
    • ☆☆

    Sometimes there is expected loss in the production process.
    Coope and Sorcerer Co make product T42 in a continuous process, for which standard and actual quantities in month 10 were as follows.

    Qty—–Std$/kg – value—Quantity kg — actual price/kg–std cost of actual usg
    Material P 40000 — 2.50 –100,000–34000———–2.50——————85000
    Material Q 20000— 4.00 —80000—- 22000 ———4.00 ————— 88000
    total———60000————-180000—- 56000——————————173000

    Losses occur at an even rate during the processing operations and are expected to be 10% of materials input.
    So budgeted output for the month was 54000 of t42 (=60,000 * 90%). Actual output during the month
    was 51,300 kg of T42.

    Req = calculate the usage, mix and yield variance.

    Solution
    standard usage for actual output of 51,300 kg

    Kg
    Material P 38000 (51300/54000) * 40000 = 38000kg
    Material Q 19000 (51300/54000) * 20000 = 19000 kg
    57000

    Is there an alternative “easy” way of arriving to the above figures (38000 and 19000) ?

    (please note the above working is part of the solution for usage variances)

    March 6, 2021 at 4:15 pm #613777
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51552
    • ☆☆☆☆☆

    I find the most. logical way it to do it the way I work through in my free lectures on mix and yield variances.

    The lectures are a complete free course for Paper PM and cover everything needed to be able to pass the exam well 🙂

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