Question

A company manufactures a single product. The standard material cost of the product is 0.5 kilos of direct material at $$\$ 8$$ per kilo. During last month 20,000 units of the product were made and these used 10,500 kilos of material. Purchases and usage of materials were the same quantity and purchases cost $$\$ 82,500$$. What was the direct materials price variance for the month? A $$\$ 1,500(\mathrm{~F})$$ B $$\$ 1,500(\mathrm{~A})$$ C $$\$ 2,500(\mathrm{~F})$$ D $$\$ 2,500(\mathrm{~A})$$

   A company manufactures a single product. The standard material cost of the product is 0.5 kilos of direct material at $$\$ 8$$ per kilo. During last month 20,000 units of the product were made and these used 10,500 kilos of material. Purchases and usage of materials were the same quantity and purchases cost $$\$ 82,500$$.
What was the direct materials price variance for the month?
A $$\$ 1,500(\mathrm{~F})$$
B $$\$ 1,500(\mathrm{~A})$$
C $$\$ 2,500(\mathrm{~F})$$
D $$\$ 2,500(\mathrm{~A})$$

ACCA F2 Management Accounting: F2 (Acca Key Study Text)

Emile Woolf… 1st Edition

Chapter 12, Problem 7

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The standard cost per kilo of material is \$8. The standard quantity for 20,000 units is 0.5 kilos per unit, so the total standard quantity of material is $20,000 \times 0.5 = 10,000$ kilos. Therefore, the standard cost for the material used is \(10,000 \text{ Show more…

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A company manufactures a single product. The standard material cost of the product is 0.5 kilos of direct material at $$\$ 8$$ per kilo. During last month 20,000 units of the product were made and these used 10,500 kilos of material. Purchases and usage of materials were the same quantity and purchases cost $$\$ 82,500$$. What was the direct materials price variance for the month? A $$\$ 1,500(\mathrm{~F})$$ B $$\$ 1,500(\mathrm{~A})$$ C $$\$ 2,500(\mathrm{~F})$$ D $$\$ 2,500(\mathrm{~A})$$

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