ACCA Applied Knowledge · Management Accounting · Variance calculations and analysis
Brenner Co's standard is 5 kg of material at $12 per kg per unit. Actual output was 3,000 units. Actual material used was 15,400 kg at an actual cost of $12.50 per kg. The material price variance is $7,700 adverse. What is the material usage variance?
The usage variance is $4,800 adverse. Actual output of 3,000 units should use 15,000 kg, but 15,400 kg were used. The 400 kg excess is valued at the standard price of $12 per kg, giving $4,800 adverse.
- A$4,800 adverseCorrect
- B$4,800 favourable
- C$4,950 adverse
- D$7,700 favourable
Explanation
Standard usage = 3,000 x 5 = 15,000 kg. Actual 15,400 kg, excess 400 kg x $12 = $4,800 adverse. Check price: 15,400 x $0.50 = $7,700 adverse, which confirms all material bought was used.
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