AAT mock paper 1.2 task C backward variances
lyndsey1570
Registered Posts: 11
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 ?!?
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

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.uk1 
Nicholas
I saw your name and knew the answer will be well explained
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