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    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.
    A ₹10,000 Adverse Correct Answer Incorrect Answer
    B ₹12,500 Adverse Correct Answer Incorrect Answer
    C ₹12,500 Favourable Correct Answer Incorrect Answer
    D ₹15,000 Adverse Correct Answer Incorrect Answer
    E ₹12,500 Adverse Correct Answer Incorrect Answer

    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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