MDCL - Variance Help

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!

Comments

  • PeterC
    PeterC Registered, Tutor Posts: 247 Dedicated contributor 🦉
    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
    Joe725 Registered Posts: 3
    @PeterC Thank you, that's a big help!
  • PeterC
    PeterC Registered, Tutor Posts: 247 Dedicated contributor 🦉
    You're welcome
Privacy Policy