Standard quantity 1,000 kg, actual quantity 1,100 kg, standard price ₹10. Material usage variance is:
A₹1,000 favourable
B₹1,000 adverse
C₹1,100 adverse
D₹1,100 favourable
Answer & Solution
Correct answer: B. ₹1,000 adverse
1. Material usage variance formula: (Standard quantity − Actual quantity) × Standard price.
2. Substitute: (1,000 − 1,100) × 10 = −100 × 10 = −1,000.
3. The negative sign indicates an adverse variance because actual usage exceeded standard.
4. Hence the variance is ₹1,000 adverse.
_Source: ICAI BoS Inter Paper 3, Ch 13 "Standard Costing", §13.5.1 Illus 4_
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