- This topic has 1 reply, 2 voices, and was last updated 11 years ago by .
Viewing 2 posts - 1 through 2 (of 2 total)
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.
Interactive BPP books for June 2026 exams, recommended by OpenTuition.
Get discount code >>
Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Variances
Hi John sir, plz help me with the following question, The answer i find is quiet different and m confused.
A company operates std absorption costing system. The following information has been extracted from the standard cost card of one of its products:
Budgeted production 1,500 units
Direct materials cost: 7 kgs * $4.10 = $28.70 per unit
Actual results for the period were as follows:
Production 1600 units
Direct material ( purchased and used ) 1200 kgs, cost $52,200
It has subsequently been noted that, due to a change in economic conditions, the best price that the material could have been purchased for was $4.50 per kg during the period.
Find material price planning variance
I could not understand the solution , it takes 0.4 difference in price and multiplies it with 11200 units. 11200 UNITS are confusing me.
What you are forgetting is that the prices of 4.10 and 4.50 per kg.
The actual production is 1600 units, but each unit has standard usage of 7 kg, so the standard usage for the actual production is 1600 x 7 = 11,200 kg.
