Accounting Multiple Choice Question – 23 July 2023

The standard material specification for a unit of production is 2 kg costing £7.50 per kilo.

Budgeted production for a period was 600 units, actual production was 620 units.

The actual material cost of purchasing 1,200 kilos was £9,400.

What was the material price variance?

Select ONE answer:

1. £100 adverse
2. £100 favourable
3. £300 adverse
4. £300 favourable

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – (Actual price – Standard price) x Actual quantity used = Material price variance — > £9,400 – £9,000 * (20 units * 2kgs * £7,.50) = £100 adverse
2. Not correct
3. Not correct
4. Not correct

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