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Question:
The following information related to April production of product CK:
Actual. Budget
Units produced. 580. 600
Input of material. 1566. 1500
(kg)
Cost of material $77517. $76500
purchased &input
What is material usage variance?Sir, please explain 5916(A) as answer to this question.
The standard usage is1,500/600 = 2.5 kg per unit.
For the actual production of 580 units, they should be using 580 x 2.5 = 1,450 kg
Therefore the usage variance is 1,566 – 1,450 = 116 kg, which is costed out at the standard cost per kg of $76,500/1,500 = $51.
115 x $51 = 5,916
This is all explained in my free lectures on variances. The lectures are a complete free course for Paper F2 and cover everything needed to be able to pass the exam well.
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