Question 1

A food processing company has a standard material requirement of 10 kg of raw ingredients to produce 1 batch of output. The standard price is $2 per kg. 
During the period, 10,500 kg of raw ingredients were used to produce 1,000 batches.

Calculate the material usage variance. State your answer as a number followed by 'F' for Favorable or 'A' for Adverse (e.g., 500 A).

Accepted Answer

1. Calculate standard quantity for actual production (Actual batches * Std kg per batch). 2. Compare to actual quantity used. 3. Multiply the difference by the standard price per kg.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Calculating the variance in kg (500) without multiplying by the standard price, or getting the direction wrong.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA MA — Management Accounting Practice Exam 4

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