Q1

Maria manufacturers gives the following details of standard cost relating to one unit of a product.

Quantity of raw material required 20 Kg.

Rate of raw material OMR 8 per Kg

Actual production of QPz:

Production during the month 2000 Kg.

Quantity of material used 40,000 Kg.

Raw material purchased 45000 kg @ 9 per kg.

Required:

1. Compute three variances relating to material and verify the answer. 4 Marks

2. If there is 20% decrease in standard usage of raw material , what impact it will create in material cost variance. 2 Marks

Q2

Material price variance - OMR 2500 (A)

Standard rate of material - OMR 10

Actual rate of raw material - OMR 15

Standard quantity of raw material for actual production - 6,600 Kg

Actual cost of raw material used in production OMR 100,500

Calculate material cost variance 2 Marks

Q3.

How will you explain in your own words material mix variance and material yield variance. 2 Marks