CA Inter P4 · Chapter 12 · Question 2 of 10
Using the same data (standard 4 kg at ₹25 per unit; actual output 2,000 units; actual usage 8,300 kg at ₹24), the material usage variance is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) ₹7,500 (Adverse)
Explanation
Standard quantity for actual output = 2,000 x 4 = 8,000 kg. Usage variance = (standard quantity - actual quantity) x standard price = (8,000 - 8,300) x ₹25 = -₹7,500, i.e. ₹7,500 Adverse. The standard price, not the actual price, is used.
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