ExpertACCA · Question 28 · Planning and Operational Variances
Section B - Case 3: UrbanTransit
UrbanTransit operates a fleet of municipal buses. The company uses a standard costing system to monitor fuel costs.
At the start of the year, the original standard price for diesel was set at $2.00 per liter.
Mid-year, due to a global geopolitical shock, the market price of diesel surged. Management revised the standard price to $2.50 per liter to reflect uncontrollable market conditions.
During the last quarter, UrbanTransit purchased and used 100,000 liters of diesel at an actual total cost of $260,000.
What is the material price operational variance?
Section B - Case 3: UrbanTransit
UrbanTransit operates a fleet of municipal buses. The company uses a standard costing system to monitor fuel costs.
At the start of the year, the original standard price for diesel was set at $2.00 per liter.
Mid-year, due to a global geopolitical shock, the market price of diesel surged. Management revised the standard price to $2.50 per liter to reflect uncontrollable market conditions.
During the last quarter, UrbanTransit purchased and used 100,000 liters of diesel at an actual total cost of $260,000.
What is the material price operational variance?
Answer options:
$10,000 Adverse
$10,000 Favorable
$50,000 Adverse
$60,000 Adverse
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