# The chapter is basic variance analysis

The chapter is basic variance analysis

A company manufactures a single product L , for which the standard material cost is as follows.

``````                                                   \$ per unit
``````

Material 14 kg x \$3 = 42

During July , 800 units of L were manufactured , 12000 kg of material were purchased for \$ 33600, of which 11500 kg were issued to production.

SM Co values all inventory at standard cost.

What are the material price and usage variances for July ?

``````             Price                   Usage
``````

A. \$2300 (F) \$900 (A)
B \$ 2300 (F) \$ 300 (A)
C \$ 2400 (F) \$ 900 (A)
D \$ 2400 (F) \$ 840 (A)

May 19th 2017

## 3 Replies

I am sorry for the typing errors , in advance

May 19th 2017 180 Points

Materials Prices variances \$900F
Materials usage variances \$900A

July 20th 2018 140 Points
–1 Vote

Material price variance , you must calculate total cost material purchased weather used or not. And for Material usage , u must calculate the material that was actually used while closing inventory must be valued @ standard costs. I hope this helps.

Price variance = \$2400Favorable

Qty p x actual cost = \$33600
Qty p x Sp= 12000kg x \$3= \$36000