Question

The standard material required to manufacture one unit of Product A is 10kg. and the standard price
per kg. of material is Rs. 2.50 the cost account
records, however, reveal that 11500 kg. of materials
Costing Rs. 27,600 were used for manufacturing 1000 units
of product A. calculate material variances.​

Answer 1

Answer:

26850

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Answer 2

Find the material cost variance for the given data about a product A.

Explanation:

• Material cost variance for a given product is calculated by finding the difference between the standard cost of production and the actual cost of production per unit.
• Here, the standard material cost per kg is, $C_s=Rs.\ 2.5$
• Here, the standard material required for the production of one unit is , $W_s=10\ kg$
• Here, the actual material cost per kg is , $C_a=\frac{27600}{11500}= Rs.\ 2.4$
• Here, the actual material required for the production of one unit is , $W_a=\frac{11500}{1000}=11.5\ kg$
• Hence the material cost variance denoted by 'V' is given by, $V=(C_sW_s)-(C_aW_a)\\->V=(2.5(10))-(2.4(11.5))\\->V=-2.6$  
• Material cost variance is $Rs.\ 2.6$ unfavorable as actual cost is more than the standard cost