CIMA BA2 · Chapter 7 · Question 3 of 14
A company produced 2,000 units in a period. The standard usage is 4 kg of material per unit at a standard price of $4.80 per kg, and 8,300 kg were actually used. What is the material usage variance?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) $1,440 adverse
Explanation
Standard usage for actual output = 2,000 x 4 kg = 8,000 kg. Actual usage = 8,300 kg, so 300 kg more than standard. Usage variance = 300 x standard price $4.80 = $1,440 adverse. Usage variances are always valued at standard price.
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