Standard quantity of material per unit 5KG. Standard Price Rs 5 per KG. actual number of units 400 units. Actual quantity 2,200KG and price of material Rs 4.80 per kg. Calculate material price. a) 100(F) b) 500(A) c) 440(F) d) 600(F)

Standard quantity of material per unit 5KG. Standard Price Rs 5 per KG. actual number

of units 400 units. Actual quantity 2,200KG and price of material Rs 4.80 per kg.

Calculate material price.

a) 100(F)

b) 500(A)

c) 440(F)

d) 600(F)
by

2 Answers

Answer :

c) 440(F)
by

Answer :

The standard quantity of material per unit is 5KG, so the standard quantity for 400 units would be:

Standard quantity = 5KG/unit x 400 units = 2000KG

The standard price per KG is Rs 5, so the standard material price for 2000KG would be:

Standard price = 2000KG x Rs 5/KG = Rs 10,000

The actual quantity of material used was 2,200KG and the actual price per KG was Rs 4.80. So the actual material price would be:

Actual price = 2,200KG x Rs 4.80/KG = Rs 10,560

To calculate the material price variance, we subtract the actual material price from the standard material price:

Material price variance = Standard price - Actual price

= Rs 10,000 - Rs 10,560

= Rs -560 (Favorable)

Therefore, the material price variance is Rs -560 (Favorable), which means that the actual material cost was lower than the standard material cost.

Option (c) is the correct answer: 440(F).
by

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