ICAEW BIP · Chapter 9 · Question 3 of 13
Output for the period was 2,000 units. The standard usage is 4 kg per unit at a standard price of £4.50 per kg. Actual usage was 8,400 kg, which cost £36,960. What is the material usage variance?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) £1,800 adverse
Explanation
Standard usage for actual output = 2,000 x 4 kg = 8,000 kg. Actual usage = 8,400 kg, which is 400 kg more than standard. Usage variance = 400 kg x standard price £4.50 = £1,800 adverse. Usage variances are always valued at standard price.
More Standard costing and variance analysis MCQs
- Q5Employees were paid for 5,200 hours but worked only 4,900 hours because of a machine breakdown. Output was 1,500 units, and the standard…
- Q6Variable production overheads are absorbed at a standard rate of £5 per labour hour worked. In the period, 4,900 labour hours were worked…
- Q7Budgeted fixed production overheads are £120,000 and budgeted output is 10,000 units. Fixed overheads are absorbed per unit. Actual output…
- Q8A company sold 4,600 units for total revenue of £262,200. The standard selling price is £55 per unit. What is the sales price variance?
- Q9Budgeted sales were 5,000 units and actual sales were 4,600 units. The standard contribution is £22 per unit and the standard profit is…