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variance analysis

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › variance analysis

  • This topic has 2 replies, 3 voices, and was last updated 11 years ago by John Moffat.
Viewing 3 posts - 1 through 3 (of 3 total)
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    Posts
  • May 16, 2014 at 8:50 pm #169115
    abdullah
    Participant
    • Topics: 35
    • Replies: 29
    • ☆☆

    A COMPANY has a budgeted material cost of $125000 for the production of 25000 units per month .Each unit is budgeted to use 2kg of material.The standard cost of material is $2.50 per kg

    Actual materials in the month cost $136000 for 27000 units and 53000 kg were purchased and used.

    WHAT IS TH E MATERIAL USAGE VARIANCE?

    sir i got 7500(a) but in the revision kit the answer is 2500(f)
    can you please explain the answer

    May 16, 2014 at 9:27 pm #169120
    Effedua-Paul
    Member
    • Topics: 0
    • Replies: 1
    • ☆

    Your cost card would be :
    2 kg/unit @ $2.50 = $5/ unit
    You were asked to look for material usage, so would be,

    flexed (2 kg x 27000) = 54000kg
    actual = 53000 kg ( given in the info alrdy)
    ———-
    1000kg favourable
    x $ 2.50
    ———–
    $2,500 favourable

    May 17, 2014 at 3:23 pm #169206
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    Effedua-Paul is correct (even though he is not the tutor!! 🙂 )

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