Financial Performance question - nerves kicking in!

wajoda2002

Hi,

Can someone help with this please? I keep getting the answer to £2,600, however the answer is £2,500

A company that produces Jetsams has standard cost information of 0.65kg of material at £25.00 per kg for each Jetsam.

During September, 4,000 Jetsams were produced, using 2,700 kg of material that cost £67,600.

Complete the following table using the drop down menus to show the material variances.

Direct material usage variance?

TIA

wajoda2002

Sussed it. Thank you

Dsindle

Hi

This is how its worked out:

You used 2700kg but you should have used 2600kg (0.65 x 4000) - resulting in a difference of 100kg @ £25.00 each = £2500

For usage variances you need to remember its comparing what you 'should have' used against what you 'did' use.

Hope this helps....

deep0075

here is the answer:

.65x4000=2600 standard production qty

standard rate is 25(standard production qty- actual production qty)

25(2600-2700)

25(100)

= 2500 adverse