Question #287324

A mfg. concern, which has adopted standard costing, furnishes the following information:

Standard:

Material for 70 kg. Of finished products ----> 100 kgs.

Price of materials . -----> Rs. 1 per kg

Actual:

Output ----> 210,000 kgs

Material used -----> 280,000 kgs.

Cost of materials  ----> Rs. 2,52,000

Calculate material cost variance, material price variance, and material usage variance?


1
Expert's answer
2022-01-14T10:18:02-0500

Material cost Variance= (StandardQuantity×StandardPrice)(ActualQuantity×ActualPrice)(Standard Quantity\times Standard Price)- (Actual Quantity\times Actual Price)

= (StandardQuantity×StandardPrice)(ActualQuantity×ActualPrice)(Standard Quantity\times Standard Price)- (Actual Quantity\times Actual Price)

Standard quantity=(2100000×100)70=3,000,000\frac {(2100000\times100)} {70}=3,000,000

Actual price= 252000280000=0.9\frac {252000} {280000}=0.9

MCV=(3000000×1)(280000×0.9)(3000000\times 1)- (280000\times 0.9)

(3000000)(252000)=2,748,000(F)(3000000)- (252000)= 2,748,000 (F)

Material Price Variance=(BudgetedPriceActualPrice)×QuantityofmaterialUsed(Budgeted Price-Actual Price)\times Quantity of material Used


= (10.9)×280,0000(1-0.9)\times 280,0000

= 28,000 (F)


Material Usage Variance

MUV=(StandardQuantityallowedActualquantityused)×standardpriceperunitofmaterialMUV=(Standard Quantity allowed-Actual quantity used)\times standard price per unit of material

=(3000000280,000)×1=(3000000-280,000)\times 1

=2,720,000= 2,720,000








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