# AAT level 4 MABU assessment 2 task 7c,d

Registered Posts: 4 New contributor 🐸
Hi guys
I've been staring at this question for an hour now and still can't work it out...

The following information has been extracted from the accounts of B Ltd for month two.
Actual output 10,000 units
Material cost variance £6,000 A
Material price variance £3,000 F
Standard usage per unit 2 kg
Standard price per kg £3
c) - Select the material usage variance from the following options.
£

- How many kgs were actual usage variance from the following operations.
kg

B Ltd rents a werehouse at a cost of £500,000 per year. The folowing additional information is also avaiable.
Actual capacity of existing warehouse 750,000 units
Actual cost of each additional warehouse unit £150,000
Actual capacity of each additional warehouse unit 100,000 units
Additional fee for each additional warehouse unit £5,000
The production budget for next year will be 960,000 units.
d) Calculate the budget rental cost for next year.
£

• MAAT Posts: 474 Dedicated contributor 🌟 🐵 🌟
For c)
Material Cost variance = Material Price variance + Material usage variance
Material usage = Material Cost - Material Price
= -6000 - 3000
= -9000 or 9000 Adverse
Material usage = (standard use - actual use) * standard price per unit
-9000 = (20000 - Actual use) * 3
Actual use = 20,000+3000
= 23,000 kg for 10,000 units or 2.3 kg per unit.

For d)

You need 960,000 units and existing covers 750,000. 960000-750000 = 210,000
There for you need to budget for 3 additional warehouses to cover the difference.
Extra cost = 3* 155,000

Total expected cost = £965,000

I might have messed up as it's been a while since I've touched variances but this should help.
AAT Level 4, MAAT
ACCA in progress
F4- Passed Aug 2020
F5- Passed Dec 2020
F6- Passed Sep 2020
F7- Passed June 2021
F8 - Passed Sep 2021
F9 - Passed June 2021

SBL -
SBR - Passed Mar 22
ATX - Passed Dec 21
APM - Passed June 22
• Registered Posts: 4 New contributor 🐸
Great thank you -:)