The standard materials cost of a product is 5kg × $7.50 per kg = $37.50. Actual production of 10,000 units used 54,400kg at a cost of $410,000.

In retrospect, it was realised that the standard materials cost should have been 5.3kg per unit at a cost of $8 per kg. The standard cost was revised to this amount.

 

Required:

1) Calculate the materials planning and operational variances in as much detail as possible.