Financial Performance question - nerves kicking in!

wajoda2002
wajoda2002 Registered Posts: 28 Regular contributor ⭐
in AAT Level 4 (Level 8 in Scotland)
Hi,

Can someone help with this please? I keep getting the answer to £2,600, however the answer is £2,500

A company that produces Jetsams has standard cost information of 0.65kg of material at £25.00 per kg for each Jetsam.

During September, 4,000 Jetsams were produced, using 2,700 kg of material that cost £67,600.

Complete the following table using the drop down menus to show the material variances.

Direct material usage variance?

TIA

Comments

  • wajoda2002
    wajoda2002 Registered Posts: 28 Regular contributor ⭐
    Sussed it. Thank you
  • Dsindle
    Dsindle Registered Posts: 39 Regular contributor ⭐
    Hi

    This is how its worked out:

    You used 2700kg but you should have used 2600kg (0.65 x 4000) - resulting in a difference of 100kg @ £25.00 each = £2500

    For usage variances you need to remember its comparing what you 'should have' used against what you 'did' use.

    Hope this helps....
  • deep0075
    deep0075 Registered Posts: 2 New contributor 🐸
    here is the answer:

    .65x4000=2600 standard production qty

    standard rate is 25(standard production qty- actual production qty)

    25(2600-2700)

    25(100)

    = 2500 adverse

Categories

Privacy Policy