Question

80 kg of Material A at a standard price of Rs. 2 per kg and 40 kg of Material B at a standard price of Rs. 5 per kg were to be used to manufacture a 100 kg of a chemical.

During a month, 70 kg of Material A priced at Rs. 2.10 per kg and 50 kg of Material B priced at Rs. 4.50 per kg were actually used and the output of the chemical was 102 kg.
a. Find out the Material Variances.

Answer 1

The Material Variances for Material A include a favorable price variance of Rs. 7 and an adverse quantity variance of Rs. -20. The Material Variances for Material B include an adverse price variance of Rs. -25 and a favorable quantity variance of Rs. 50.

Step-by-step explanation:

To find the Material Variances, we need to calculate the price variance and quantity variance for both Material A and Material B.

For Material A:

1. Price variance = (Actual price - Standard price) x Actual quantity
   Price variance = (2.10 - 2) x 70
   Price variance = 0.10 x 70 = Rs. 7
2. Quantity variance = (Actual quantity - Standard quantity) x Standard price
   Quantity variance = (70 - 80) x 2
   Quantity variance = -10 x 2 = Rs. -20

For Material B:

1. Price variance = (Actual price - Standard price) x Actual quantity
   Price variance = (4.50 - 5) x 50
   Price variance = -0.50 x 50 = Rs. -25
2. Quantity variance = (Actual quantity - Standard quantity) x Standard price
   Quantity variance = (50 - 40) x 5
   Quantity variance = 10 x 5 = Rs. 50

Therefore, the Material Variances are:

Material A:

• Price variance = Rs. 7 (Favorable)
• Quantity variance = Rs. -20 (Adverse)

Material B:

• Price variance = Rs. -25 (Adverse)
• Quantity variance = Rs. 50 (Favorable)