Tag: KS3

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

This work is licensed under a Creative Commons Attribution 4.0 International License.

A business produces the following actual figures.

• Production – 210 units
• Quantity of direct material – 483 tonnes
• Total cost of direct materials – £1,449,000

A standard unit uses 2.25 tonnes of material at a price of £3,100 per tonne.

What are the usage and price variances?

Select ONE answer:

1. Usage – £32,550 ADV & Price – £48,300 FAV
2. Usage – £32,550 FAV & Price – £48,300 ADV
3. Usage – £176,700 ADV & Price – £48,300 FAV
4. Usage – £176,700 FAV & Price – £48,300 ADV

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 – Usage — > £1,449,000 – £1,464,750 (210 * 2.25 * £3,100) & Price — > £1,497,300 (483 tonnes * £3,100) – £1,449,000 = £48,300 FAV
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.