PEV-Dec 2008

jackiepowell

DEc 2008 Pev... Task 1.1 Bi...Direct Material (glass) price variance.

Please help!!! I really havent a clue as to why the AAT have got the answer from.

Could anyone explain why i use those figures?

Thanks
Jackie :crying:

Byrnie

2100 x 5 is 2100 units actually produced x 5 kg - standard usage of glass per panel.
10500kg is actual amount used.
£12 is standard price per kg. Formula is standard price x(standard usuage for actual production less actual amount used)
hope this helps

wolfe

hi
material price variance formula is:
(standard price per kg of glass - actual price per kg of glass) actual kgs used

standard price per kg calculation:if the total cost of material is divided by the total quantity , it will give the std price per kg

£120,000/10,000 kg = £12

actual price per kg calculation:
total cost divided by total qty will give price per kg
£147,000/10,500 kg = £14

actual kgs used calculation:
the actual kgs of glass used in production is given as 10,500 kg

thus
( £12 -£14) 10,500 kg = £ 21,000 (A)