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AAT mock paper 1.2 task C backward variances

lyndsey1570lyndsey1570 Registered Posts: 11
in Management Accounting: Decisions and Control
Hi all

Really stuck with this question. The product is budgeted to use 1.25kg of material per unit at a cost of £7.80 per kg.
During the last month the company used 1140kg to manufacture 950 units and the material price variance was £912 adverse.
Calculate the actual price per kg of material....

Can anyone help I’ve spent too long probably over complicating this ?!?
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Comments

  • ncraggsncraggs Just Joined Registered, Tutor Posts: 70
    The company used £1,140 kilos, which at the standard cost of £7.80, should have cost £8,892.
    However, the price variance was adverse, so it must have cost £8,892 + £912 = £9,804.
    So if 1,140 kilos cost £9,804, one kilo must have cost 9804/1140 = £8.6
    AAT Distance Learning Director First Intuition www.fi.co.uk
    lyndsey1570
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  • pyza0712pyza0712 Registered Posts: 1
    Nicholas
    I saw your name and knew the answer will be well explained :)
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