# MABU Sample Assessment 1 Q1.6

Hi all,

I was wondering if anyone would be able to divulge into how they calculate the whole of this question (Not A).

I have my exam in a few weeks time so I am getting stuck into practice questions and I am finding this particular task troublesome!

Thank you.

• 1.6 (B)

The operating statement for October showed that direct raw material costs were £142,560.
9900KG of material were used and 6000 items were made and sold.
The standard cost allows 1.6 Kilograms (KG) of material for each item at a standard price of £14.50 per KG.

(b) Complete the table of direct raw material costs, indicating whether each variance is favorable or adverse.

Direct raw material costs

Flexed Budget (standard cost) £

Actual material price per kg (correct to 0.01) £

Actual Material used per item (correct to two decimal places) KG

Price Variance £

Usage Variance £

Cost Variance £

Cost variance percentage (correct to one decimal place) %

I will post question C in an additional comment as I am sure I will run out of space.

Thanks again!
• (c) Prepare the direct labour cost statement from the activity data provided.
Round to the nearest whole number if necessary.

Activity Data Items Labour Hrs Cost £
Budget 18,300 3,660 65,880
Actual Results 18,800 4,700 82,720

Direct Labour cost of production

Standard labour cost of production £

Labour Rate
Labour Efficiency
Labour Cost

Thank you • 1.6 (B)

The operating statement for October showed that direct raw material costs were £142,560.
9900KG of material were used and 6000 items were made and sold.
The standard cost allows 1.6 Kilograms (KG) of material for each item at a standard price of £14.50 per KG.

(b) Complete the table of direct raw material costs, indicating whether each variance is favorable or adverse.

Direct raw material costs

Flexed Budget (standard cost) £

Actual material price per kg (correct to 0.01) £

Actual Material used per item (correct to two decimal places) KG

Price Variance £

Usage Variance £

Cost Variance £

Cost variance percentage (correct to one decimal place) %

I hope this makes sense, I can send you a link to the exam also if that helps.

http://www.aat-interactive.org.uk/elearning/Sample_assessments_AQ2016/AQ2016_L4_MABU_Sample_1/index.html

There is also a part C which I will post in an additional comment.

Thanks again!
• It is better to start the solution from Price, usage and cost variance. As you can see below:

Price Variance: 9900*14.50=143,550 - 142560= 990 F
Usage Variance: 6000*1.6*14.50=139200-143550= -4350
Cost Variance= 990 + -4350= -3360
Flexed budget= 142560 -3360(-3360 is from the cost variance) and the answer: 139,200
Actual material price per kg (correct to 0.01) £142,560/9900=14.40
Actual Material used per item (correct to two decimal places) KG:9900/6000=1.65