Question
In: Accounting
Q.2. A manufacturing concern which has adopted standard costing, furnished the following information: Actual: Output: 180,000...
Q.2. A manufacturing concern which has adopted standard costing, furnished the following information:
Actual:
Output: 180,000 kg.
Material used: 260,000 kg.
Cost of material: SR 650,000
Standard:
Materials for 60 kg finished products: 90 kg.
Price of Materials: SR 3 per kg.
Calculate material price variance, material usage variance and material cost variance.
Solutions
Expert Solution
| Actual | Calculation | Reference for Formula | |
| Output (units in Kg) | 180000 | Given In Question | |
| Material Used (units in Kg) | 260000 | Given In Question | Actual Quantity |
| Cost of Material (units in SR) | 650000 | Given In Question | |
| Cost of Material Per Kg (units in SR) | 2.50 | Cost of Material/Material used | Actual Price |
| Standard Costs | Calculation | Reference for Formula | |
| standard Materials per 60Kg(Units in Kg) | 90 | Given In Question | Standard Quantity |
| Standard Material for 180000 KG (Units in Kg) | 270000 | Actual Output divided by 60kg*90Kg | |
| Standard price of materials per Kg (Units in SR) | 3 | Given In Question | Standard Price |
| Formula for calculation | Answer | |
| Material price variance = (Actual price - Standard price) * Actual quantity used | = | 130000.00(Unfavourable) |
| Material Cost Variance = (Standard Quantity x Standard Price) – (Actual Quantity x Actual Price) | = | 160000(Favourable) |
| Material Usage Variance = (Standard Quantity – Actual Quantity) * Standard Price | = | 30000(Favourable) |
ekkarill92 answered 1 year agoRelated Solutions
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