Accountancy Question - aat level 4 help please

[thomas baker]

Can someone help with this question... a company used 6000 kilograms of material to produce 10000 units. the budgeted production was 12000 units, and the standard material for this output level was 6600 kilograms at £2 per kilogram.

The Material variance is:

A. 500 kilograms
B. £1200
C. 600 kilograms
D. £1000

I worked it out as £1200 but the osbourne book says the answer is £1000 can someone please help me and explain how they got there answer.

Thanks

 

[SBlundell]

To produce only 10,000 units you'd expect to use 5,500kg of material (6,600kg / 12,000 units budgeted = 0.55 kg per unit, multiplied by 10,000 units actually produced = 5,500kg). You actually used 6,000kg of material, therefore you used 500kg more than budgeted (6,000 - 5,500).

500kg @ £2 p/kilo cost you £1,000 more (for the extra material you used over and above that expected only - the material variance).

 

[Bob]

To produce only 10,000 units you'd expect to use 5,500kg of material (6,600kg / 12,000 units budgeted = 0.55 kg per unit, multiplied by 10,000 units actually produced = 5,500kg). You actually used 6,000kg of material, therefore you used 500kg more than budgeted (6,000 - 5,500).

500kg @ £2 p/kilo cost you £1,000 more (for the extra material you used over and above that expected only - the material variance).

I wish you'd been around to do my homework for me