Question

**The standard quantity and standard price of material to
produce ‘Product X’ are as follows:**

Standard Quantity: 800 kgs

Actual Quantity: 900 kgs

Standard Price: AED 10 / kg

Actual Price: AED 12 / kg

**Calculate: a. Material Cost
Variance
b. Material Price
Variance c.
Material Usage Variance**

**Note : the Answer should be in Word Format and in
Details**

Answer #1

a) Material Cost Variance = Standard cost of material - Actual cost of material

Standard cost of material = Standard quantity x Standard price

Actual cost of material = Actual quantity x Actual price

Therefore, Material cost variance = (800*10) - (900*12)

= 8000-10800 = -2800

The negative figure shows that the variance is unfavourable.

b) Material Price Variance = (Standard price - Actual price ) x Actual quantity

= (10 - 12)*900 = -1800

The negative value shows that the variance is unfavourable because of more than estimated price.

c) Material Usage Variance = (Actual quantity x Standard price) - ( Standard quantity x Standard price )

= (900*10) - (800*10)

=9000-8000 = 1000

The positive figure is due to favourable varaince. It may due to good use of skilled labour or other factors.

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22 000 kg of material was purchased at R22 per kg
The actual production of Product X for the third quarter of
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3.1.1 Raw material price
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3.1.2 Raw material usage
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Standard quantity
6.7
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Standard price
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Standard cost
$
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Standard price of the material
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Actual cost of material purchased
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Input
Standard Quantity or Hours
Standard Price or Rate
Standard Cost Per Unit
Direct materials
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$6.00 per gram
$57.00
Direct labor
0.5 hours
$23.00 per hour
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Standard quantity of the material per unit of output
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Standard price of the material
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