# MANAGEMENT ACCOUNTING DECISION & CONTROL

Registered Posts: 26 Regular contributor ⭐ 😼 ⭐
Hi
Is anyone explain the question?

The product being made by Tesco Ltd is budgeted to use 1.25 kg of material per unit at a cost of £7.80 per kg. During last month the company used 1140 kg to manufacture 950 units and the material price variance was £912 adverse. What is the actual price per kg of material? *

Thanks

• MAAT Posts: 474 Dedicated contributor 🌟 🐵 🌟
It's been a while since I've done this but I'm fairly sure it's like this:

Budgeted price of actual amount used = 1.2*7.8*950 = £8892
Actual price of actual amount used = X
Variance = -£912

8892 - X = -912

X = 9804

Price per kilo = 9804/1140 = £8.60

For these questions you need to work out what you are comparing. If it's price you need to fix the amount used and compare against the actual amount. If it's amount used you compare against the standard amount.

I always find the best way is to layout what you have and then work from there.
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
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SBL -
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ATX - Passed Dec 21
APM - Passed June 22
• Registered Posts: 26 Regular contributor ⭐ 😼 ⭐
material is 1.25 kg, can we round up 1.2?
• Registered Posts: 26 Regular contributor ⭐ 😼 ⭐
Hi

is anyone know how to approach this question
The direct labour efficiency variance has been accurately calculated for the production of 2000 units in week 9 as £450 Adverse. The production took 445 hours. The standard labour time to make one unit is 12 minutes. What is the standard labour rate per hour?

Thanks
• MAAT Posts: 474 Dedicated contributor 🌟 🐵 🌟
Amna said:

material is 1.25 kg, can we round up 1.2?

There is no rounding the 1.25kg is the budgeted amount the 1.2kg is the actual amount used per unit. (1140/950=1.2)
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
• MAAT Posts: 474 Dedicated contributor 🌟 🐵 🌟
Similar question to before but lightly more complicated.

y = standard labour rate per hour

Standard rate @ Actual time = 445y
Standard rate @ standard time = 12/60 x 2000 x y = 400y
Variance = -450

Efficiency so equation is

Standard rate @ standard time - standard rate@ actual time = variance

400y - 445y = -450
y(400-445) = -450
y = -450 / (-45)
y= £10

If you accidentally flip the figures you can think whether it makes sense to check. Variance was adverse so the expected time (standard) must have been lower than the actual time.
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: 26 Regular contributor ⭐ 😼 ⭐
Thank you so much Pian

where can I study this topic, I am struggling with how to attempt questions?
• MAAT Posts: 474 Dedicated contributor 🌟 🐵 🌟
I'd start with the budgeting module that has variances and introduces them in a nicer way before it gets more complicated in decision and control.

I'm sure there will be some videos about it online as well. What materials do you have access to I might be able to point you to the correct part of those?
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