Question

The standard cost card for a product indicates that one unit of the product requires 6 kilograms of a raw material at $0.80 per kilogram. The production of the product in April was 840 units, but production had been budgeted for 820 units. During April, 7,900 kilograms of the raw material were purchased for $6,732 and 5,320 kilograms of the raw material were used in production. The material variances for April were:

	Materials price variance	Materials quantity variance
A)	$466U	$224U
B)	$466U	$460U
C)	$412U	$224U
D)	$412U	$460U

Option A

Option B

Option C

Option D

Answer 1

Correct answer--------Option C

Working

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                    0.80	-	$                     0.85	)	x	7900
	-412
	Variance		$                 412.00			Unfavourable-U

Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	5040	-	5320	)	x	$       0.80
	-224
	Variance		$                 224.00			Unfavourable-U

.

Standard DATA for		840	units
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Direct Material	( 6 kilograms x 840 units)=5040 kilograms	$                  0.80	$          4,032.00

Actual DATA for		840	units
	Quantity (AQ)	Rate (AR)	Actual Cost
Direct Material	5320	$            0.85	$                     4,533.45