CAF-5 · Chapter 11 · Question 8 of 10
A company uses a standard costing system. The standard material cost is Rs. 40 per kg. For a given period, the material usage variance was Rs. 306,000 Adverse. If the standard quantity allowed for the actual production was 242,350 kgs, what was the actual quantity of material used?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) 250,000 kgs
Explanation
This is a "working backwards" calculation. Material Usage Variance = (Standard Quantity – Actual Quantity) × Standard Price. –306,000 (Adverse is negative) = (242,350 – AQ) × 40 –306,000 / 40 = 242,350 – AQ –7,650 = 242,350 – AQ AQ = 242,350 + 7,650 = 250,000 kgs.
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