Continuing the same data, the material usage variance is:
A₹5,040 adverse
B₹4,800 favourable
C₹9,840 adverse
D₹4,800 adverse
Answer & Solution
Correct answer: D. ₹4,800 adverse
1. Standard quantity allowed for actual output = 5 × 4,800 = 24,000 kg.
2. Material usage variance = (SQ − AQ) × SP = (24,000 − 25,200) × 4.
3. = −1,200 × 4 = −4,800.
4. The negative figure indicates an adverse variance of ₹4,800.
_Source: ICAI BoS Inter Paper 3, Ch 13 "Standard Costing", §13.5.1 Illus 5c_
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