A company's standard cost for a product includes 10 kg of material at ₹5 per kg. The actual production was 1,000 units, and 10,500 kg of material was used at ₹4.50 per kg. What is the Material Usage Variance? MCQ with Answer and Explanation
A company's standard cost for a product includes 10 kg of material at ₹5 per kg. The actual production was 1,000 units, and 10,500 kg of material was used at ₹4.50 per kg. What is the Material Usage Variance?
A. ₹2,500 (Favorable)
B. ₹5,000 (Favorable)
C. ₹5,000 (Adverse)
D. ₹2,500 (Adverse)
Answer: Option D
Solution (By JKSSB Mock Tests)
Standard Quantity for Actual Production (SQ) = 1,000 * 10 = 10,000 kg. Actual Quantity (AQ) = 10,500 kg. Standard Price (SP) = ₹5. Usage Variance = (SQ - AQ) * SP = (10,000 - 10,500) * 5 = -500 * 5 = ₹2,500 Adverse.
No comments yet. Be the first to start the discussion!