Question
A company produces 1,000 units. Standard material
consumption per unit is 4 kg @ ₹25/kg. Actual consumption is 4,500 kg @ ₹24/kg. Calculate the Material Usage Variance.Solution
Standard qty = 1,000 × 4 = 4,000 kg. Actual qty = 4,500 kg. Usage Variance = (Standard qty – Actual qty) × Std. rate = (4,000 – 4,500) × 25 = –500 × 25 = ₹12,500 Adverse.
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