Question

Marbles Company has the following information available regarding its materials:

Managers expected to pay $5 per kilogram, but ended up paying $6 per kilogram. Each unit produced should take 2 kilograms; actual total usage was 2,100 kilograms. Finally, the company planned to produce 1,000 units, but only produced 950.

Calculate the materials efficiency variance.

$2,100 (unfavorable)

$0

$1,000 (unfavorable)

$1,400 (unfavorable)

Marbles Company has the following information available regarding its materials:

Managers expected to pay $5 per kilogram, but ended up paying $6 per kilogram. Each unit produced should take 2 kilograms; actual total usage was 2,100 kilograms. Finally, the company planned to produce 1,000 units, but only produced 950.

Calculate the materials activity variance.

$2,500 (unfavorable)

$500 (unfavorable)

$500 (favorable)

$2,500 (favorable)

Answer 1

1.

Correct answer for first question is option c = $ 1,000 unfavourable.

Working :

Material efficiency variance :

= ( standard quantity for actual output - actual quantity * standard cost

= { ( 950 unit * 2 kg per unit) - 2,100 kg } * $ 5 per kg

= ( 1,900 kg - 2,100 kg ) * $ 5 per kg

= - 200 kg * $ 5 per kg

= - $ 1,000

~~~~

2.

Correct answer for second question is option c = $ 500 favourable.

Working :

Material activity variance :

=( budgeted production units - actual units produced ) * standard price per unit

= ( 1000 unit - 950 units ) * ( 2 kg per unit * $ 5 per kg)

= 50 units * $ 10 per unit

= $ 500

~~~~ please upvote. Thanx.