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Rustica Ltd. uses one raw material for one of their products. The standard cost per unit at the beginning of the year was 28, made
Rustica Ltd. uses one raw material for one of their products. The standard cost per unit at the beginning of the year was 28, made up as follows:
- Standard material cost per unit = 7 kg per unit @ 4 per kg = 28
In the middle of the year, the supplier had changed the specification of the material slightly due to problems experienced in the country of origin, so that the standard had to be revised as follows:
- Standard material cost per unit = 8 kg per unit @ 3.80 per kg = 30.40
The actual output for October was 1,400 units. 11,000 kg of material was purchased and used at a cost of 41,500.
- Calculate Material price and usage variance using the traditional method. (3 Marks)
- Calculate all planning and operational variances (7 Marks)
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