High School

In a period, 5640 kg of material were used at a total standard cost of ₹ 23,124. The material usage variance was ₹ 246 adverse. What was the standard allowed weight of material for the period?

Answer :

The question relates to calculating the 'standard allowed weight of material' based on given values, including the actual material used, the total standard cost, and the material usage variance.

Step-by-step explanation:

  1. Understanding Material Usage Variance:

    The material usage variance can be computed using the formula:

    [tex]\text{Material Usage Variance} = (\text{Actual Quantity Used} - \text{Standard Quantity Allowed}) \times \text{Standard Price Per Unit}[/tex]

    You are given that the material usage variance is ₹246 adverse, which means the actual usage exceeded the standard usage.

  2. Calculate the Standard Price Per Unit:

    You have been given the total standard cost for the actual material used:

    [tex]\text{Total Standard Cost} = \text{Actual Quantity Used} \times \text{Standard Price Per Unit}[/tex]

    • Total Standard Cost = ₹23,124
    • Actual Quantity Used = 5640 kg

    From this, the standard price per unit can be calculated as:

    [tex]\text{Standard Price Per Unit} = \frac{\text{Total Standard Cost}}{\text{Actual Quantity Used}} = \frac{23,124}{5640} \approx 4.1 \text{ per kg}[/tex]

  3. Solve for Standard Quantity Allowed:

    Use the material usage variance equation to find the standard quantity allowed:

    Given:

    • Material Usage Variance = ₹246 (adverse means it's a positive value)
    • Actual Quantity Used = 5640 kg

    Substitute these into the variance formula:

    [tex]246 = (5640 - \text{Standard Quantity Allowed}) \times 4.1[/tex]

    Solving for Standard Quantity Allowed:

    [tex]246 = 5640 \times 4.1 - \text{Standard Quantity Allowed} \times 4.1[/tex]

    Simplify:

    [tex]\text{Standard Quantity Allowed} \times 4.1 = 5640 \times 4.1 - 246[/tex]

    [tex]\text{Standard Quantity Allowed} \times 4.1 = 23124 - 246[/tex]

    [tex]\text{Standard Quantity Allowed} = \frac{23124 - 246}{4.1}[/tex]

    [tex]\text{Standard Quantity Allowed} = \frac{22878}{4.1} \approx 5580 \text{ kg}[/tex]

So, the standard allowed weight of material for the period is approximately 5580 kg.

Conclusion

The calculation shows that the standard allowed quantity of material for the period was 5580 kg based on the given material usage variance and the standard cost per unit.

Other Questions