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John Moffat.
John Moffat.-
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xyzc
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A company made a product called Bark. Bark had a standard direct material cost in the budget of 2.5 kg of material x at $4 per kg = $10 per unit.
The average market price for material x during the period was 5 per kg, and it was decided to revise the material standard cost to allow for this.
During the period 8000 units of Bark were manufactured. They required 22000 kg of material x which cost 123000.
What is the revised standard card? At the back of the book it has been given as 4kg at 5.50 =22
but I don’t understand how it has been calculated. From where do the figures 5.50 and 4kg come from?Another question that has been asked is to calculate the adverse material usage operational variance. How would this variance be calculated when there is no revised material usage figure given?
John Moffat
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You are obviously referring to the question in the BPP Revision Kit.
The revised standard cost is not 4kg at $5.50 per kg – this is a typing error by BPP.The revised standard cost is 2.5kg at $5 per kg, and these are the figures that have been used in the answers (and the answers are all correct).
If there is no revised material usage variance (and there isn’t in this question) then there is no planning variance and all of the variance is an operational variance.
xyzc
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