MDCL - Variance Help

Joe725

I'm doing the AAT MDCL Sample 2 and can't work out the variance, i'm terrible with them. It's 1.2
I thought the Variance would be:
300 x 30 = 9,000
300 x 36 = 10,800
Meaning variance of 1,800 but the answers it's 1,920.
Also i'm struggling to even start to work out the Usage variance, if anyone could help that'd be great!

PeterC

If you are doing the material price variance, I presume you already calculated the actual material cost to be £9,600.

We are told that the material actually cost £10/kg.
We are also told that the standard material per unit is 3kg, so the standard cost is £12/kg (£36 per unit/3kg)
Each kg therefore cost £2 below standard (favourable)

How many kg did they use?
The total cost was £9,600 and the cost per kg was £10, so they used 960kg

Therefore the total material price variance is 960kg x £2/kg = £1,920 (favourable)

For further guidance, try docs.wixstatic.com/ugd/9a8e75_f0f54f3053e64e40843adb41aa27c44d.pdf
or meadowgatetraining.co.uk/encyclopaedia-of-accounting/

Joe725

@PeterC Thank you, that's a big help!

PeterC

You're welcome