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    Question

    If the budgeted production units were 500 and the budgeted material required was 1000. Actual material used up is 800 units for the output of 350 units. Here the Material usage variance is:

    A Adverse Correct Answer Incorrect Answer
    B Favourable Correct Answer Incorrect Answer
    D A or C Correct Answer Incorrect Answer
    E A or B Correct Answer Incorrect Answer

    Solution

    General Model of Variance Analysis Analysis conclusion: [if !supportLists]-->· [endif]-->if the actual costs > Standard Costs , the variances will be Adverse/unfavorable

    • if the actual costs < Standard Costs , the variances will be Favorable

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