PEV-Dec 2008

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jackiepowell
jackiepowell Registered Posts: 72 Regular contributor ⭐
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:

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  • Byrnie
    Byrnie Registered Posts: 16 New contributor 🐸
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    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
    wolfe Registered Posts: 121 Dedicated contributor 🦉
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    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)
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