The standard cost of material for manufacturing a unit of a particular product i

Question

The standard cost of material for manufacturing a unit of a particular product is estimated as follows: On completion of the unit, it was found that 20 kg. of raw material costing SR 1.50 per kg. has been consumed. Compute material cost variance. The standard cost of material for manufacturing a unit of a particular product is estimated as follows: On completion of the unit, it was found that 25 kg. of raw material costing SR 3 per kg. has been consumed. Calculate material price variance. From the following data calculate material usage variance. Calculate the materials mix variance from the following: From the data given below, calculate the material price variance, material usage variance, and material mix variance. A manufacturing concern which has adopted standard costing, furnished the following information:

Explanation / Answer

1. the budgeted cost of material= 16*1= $16

the actual cost of material= 20* 1.5= 30

the variance is= 30-16/16= 14/16= 0.875 or 87.5%

2. budgeted material is - 20kgs at $2 per kg- total cost is 40

actual cost- 25*3= 75

the vairance= 75-40/40= 35/40= 0.875 or 87.5%

3. budgeted material- 20 kgs and actual usage is 25 kgs-

the variance is- 25-20/20= 5/20= 0.25 or 25% negative

4. and 5 are not visible

6. material usage varianct= 30/70 i.e expected material usage is 70kgs and actual usage is 100 kgs

= 42.85%

mateiral price variance= 70,000/210,000= 33.33%

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