Question
Question 5: A Mechanical Design Company produces an innovative design of Batttery used for electric cars. The standard design of producing one(1) unit of Battery
Question 5: A Mechanical Design Company produces an innovative design of Batttery used for electric cars. The standard design of producing one(1) unit of Battery is provided in the bill of materials BOM which requires material mix shown in Table Q5a. The current monthly production of Battery is 2000 units per month with the actual material consumption shown in Table Q5b. Determine the followingand justify why it is favorable or adverse. (i) Material usage variance; [5 marks] (ii) Material price variance; [5 marks] (iii) Total material cost variance; [5 marks] [Total15 marks]
Table Q5a | ||
Materials | Usage (units) | Total cost (OMR) |
V | 5 | 17 |
W | 3 | 38 |
X | 8 | 50 |
Y | 2 | 38 |
Table Q5b | ||
Materials | Usage (units) | Total cost (OMR) |
V | 11,939 | 51,385 |
W | 6,975 | 94,412 |
X | 17,458 | 103,790 |
Y | 4,363 | 76,787 |
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