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_
Related questions
Standard costing aids in inventory valuation because:Sales price variance equals:Same data: Fixed overhead capacity variance equals:Same data: Fixed overhead efficiency variance equals:Same data: Fixed overhead volume variance equals:Budgeted fixed overhead ₹1,20,000 for 20,000 standard hours; actual hours 18,000; actual oSame data: Labour efficiency variance is:Same data: Labour rate variance is: