ExpertMedium2 marksShort Answer
ACCA · Question 24 · Standard costing
Section A
AeroForge manufactures titanium drone chassis. The standard material requirement is 5 kg of titanium alloy per chassis at a standard price of $12 per kg.
During the month, AeroForge produced 2,000 chassis. The actual amount of titanium alloy used was 10,400 kg.
Calculate the material usage variance in dollars.
(Enter the absolute numerical value only. Do not include a negative sign, dollar sign, or 'A'/'F')
Section A
AeroForge manufactures titanium drone chassis. The standard material requirement is 5 kg of titanium alloy per chassis at a standard price of $12 per kg.
During the month, AeroForge produced 2,000 chassis. The actual amount of titanium alloy used was 10,400 kg.
Calculate the material usage variance in dollars.
(Enter the absolute numerical value only. Do not include a negative sign, dollar sign, or 'A'/'F')
How to approach this question
1. Calculate standard quantity for actual production: 2,000 chassis * 5 kg = 10,000 kg.
2. Compare to actual quantity used: 10,400 kg.
3. Difference in kg: 10,400 - 10,000 = 400 kg (Adverse).
4. Multiply by standard price: 400 kg * $12/kg.
Full Answer
Standard quantity for actual production = 2,000 units × 5 kg/unit = 10,000 kg.
Actual quantity used = 10,400 kg.
Difference = 400 kg more than standard (Adverse).
Material usage variance = 400 kg × $12/kg (Standard Price) = $4,800 Adverse. The question asks for the numerical value only.
Common mistakes
Multiplying the 400 kg difference by the actual price instead of the standard price.
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