ACCA MA · Chapter 12 · Question 3 of 10
The standard material usage is 4 kg per unit, at a standard price of $4.50 per kg. 1,900 units were produced using 7,850 kg, which were bought at $4.40 per kg. What is the material usage variance?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) $1,125 adverse
Explanation
Standard usage for actual output = 1,900 x 4 = 7,600 kg. Actual usage = 7,850 kg, which is 250 kg more than standard, so the variance is adverse. It is valued at the standard price: 250 x 4.50 = $1,125 adverse. Valuing at the actual price ($1,100) is wrong.
More Standard costing and cost variances MCQs
- Q5The standard labour time is 1.5 hours per unit, at $16 per hour. During a period 1,400 units were produced. Employees were paid for 2,300…
- Q6Variable production overhead is absorbed at a standard rate of $4 per direct labour hour. In a period, 3,150 labour hours were worked, the…
- Q7A company bought 5,200 kg of material for $23,400 and used 4,800 kg of it in production. Raw material inventory is valued at standard…
- Q8In a period, 2,100 units were produced, and 6,480 hours were worked. The standard labour rate is $15 per hour, and the labour efficiency…
- Q9A company reports a favourable material price variance and an adverse material usage variance. Which of the following is the most likely…