Question

Question 3 Not yet answered Marked out of 1.00 Flag question A company uses a standard costing system and the standard materials cost per unit of their product is £20. The actual level of production of this product for a period was 3.200 units. The company recorded the following variances during the period: Material price variance: £500 favourable Material usage variance: £1.500 favourable What was the actual cost of the materials for the period? Calculate your answer to the nearest whole £ and enter it in the blank space provided. Answer the question by providing the appropriate number in the box below (eg 123456). Do not enter a dot, commas, spaces, letters, words or symbols (such as £). Failure to follow these instructions will result in the answer being marked as incorrect Answer

Answer 1

Solution :

Material Price variance = AQ X SP - AQ X AP

£ 500. = 3,200 X £ 20 - 3,200 X AP

£ 500. = 3,200 ( £ 20 - AP)

£ 500 / 3,200 - £ 20 = - AP

- AP = - £ 19.84

AP. = £ 19.84

Actual cost of the material = AP X AQ

= £ 19.84 X 3,200 units

= £ 63,488

AP = Actual price per unit

SP = Standard price per unit

AQ = Actual quantity used