AMAC AAT task 3 paper 1

ChantelleGuest_1 Registered Posts: 1 New contributor 🐸
Please can someone help me? I cannot work out how the materials price and usage are calculated. I can find the materials cost variance of £5420 but do not understand how the answers of £3420 and £2000 were reached for materials price, and materials usage.


  • PeterC
    PeterC Registered, Tutor Posts: 245 Dedicated contributor 🦉
    To make 1,000,000 units they should have used 20,000 kg (1,000,000 x 0.02)
    They actually used 19,000 kg (1,000,000 x 0.019)
    The reduction of 1,000 kg should save £2,000 (1,000 kg x £2/kg)
    This is the usage variance

    The 19,000 kg they used should have cost £2/kg
    It actually cost £1.82/kg
    This is a saving of £0.18/kg, or £3,420 (0.18 x 19,000)

    See also "Standard cost Variances 1"

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