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variance

This topic has 3 replies, 2 voices, and was last updated 6 years ago by John Moffat.

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July 6, 2016 at 4:44 pm #324784
adarsh1997
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Standard Cost
-Direct materials (28,600 kg at $2) = $57,200

Actual results
-Direct materials (28,400 kg at $2.05)=$58,220

Material Usage Variance is $1420(A)

How to obtain this answer?
July 6, 2016 at 7:08 pm #324798
John Moffat
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Are you sure there is no more information given in the question (because it is not possible to answer without more information)?

I assume that you have watched my free lectures, in which case you will know that the material usage variance is the difference between the actual usage and the standard usage for the actual production, multiplied by the standard cost per kg..
July 6, 2016 at 7:21 pm #324800
adarsh1997
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Dear sir,
I do have watched your lectures concerning variance however in the BPP revision kit, it has been asked to calculate the fixed production capacity variance? What is fixed production capacity variance and how it is calculated?
July 7, 2016 at 9:34 am #324815
John Moffat
Keymaster
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It is the fixed overhead capacity variance, and how to calculate this is covered in the free lectures on variances.
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