CA Intermediate · Cost and Management Accounting · Standard Costing
Kaveri Plastics Ltd. fixes the standard for a moulded part at 4 kg of resin per unit at Rs 90 per kg. In March, it produced 1,500 units and used 6,180 kg of resin. Which figure correctly gives the material usage (quantity) variance?
The material usage variance is Rs 16,200 Adverse. Standard quantity for 1,500 units is 6,000 kg, but 6,180 kg was used, an excess of 180 kg. Valued at the standard price of Rs 90 per kg, the excess usage gives an adverse variance of Rs 16,200.
- ARs 16,200 AdverseCorrect
- BRs 16,200 Favourable
- CRs 12,600 Adverse
- DRs 18,000 Adverse
Explanation
Standard quantity for actual output = 1,500 x 4 = 6,000 kg. Actual usage is 6,180 kg, so excess is 180 kg. Usage variance = 180 x Rs 90 = Rs 16,200 Adverse. Rs 16,200 Favourable has the wrong sign; the other options use wrong quantities or prices.
Did you get it right without looking?
One question tells you little. A timed set on Standard Costing shows your real accuracy, how long you take and where you lose marks.
More Standard Costing questions
- Sundaram Fabrics set a standard of 4 kg of yarn per unit at Rs 50 per kg. In March it produced 1,500 units, used 6,300 kg of yarn and paid R…
- Sundaram Fabricators set a standard of 4 kg of material per unit at ₹50 per kg. In a month it produced 2,000 units and consumed 8,400 kg, pu…
- In Ganga Foods, budgeted fixed overhead was Rs 3,00,000 for 10,000 units. Actual output was 9,000 units and actual fixed overhead was Rs 3,1…
- Ananya Textiles budgeted 2,000 kg of yarn at a standard price of Rs 150 per kg for the month. It actually purchased 2,200 kg at Rs 156 per k…
- Tarun Textiles Ltd. budgeted to produce 2,000 metres of cloth at a standard cost of Rs 90 per metre. Actual output was 2,200 metres, and act…
- Which one of the following is the correct description of a 'current standard' in standard costing?