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.

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

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

Q3.

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