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The standard cost of a chemical mix is as under : 4 tons of material A @ ` 16 per ton 8 tons of material B @ ` 18 per ton Standard yield is 80% of input. The actual cost for the period is as under : 6 tons of material A @ ` 9 per ton 7 tons of material B @ ` 15 per ton Actual yield is 10 tons. Compute Material Variance.?
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The standard cost of a chemical mix is as under : 4 tons of material A...
Material Variance Calculation
The material variance is the difference between the standard cost of materials and the actual cost of materials used in the production process. The formula for material variance is:
Material Variance = (Standard Cost – Actual Cost) x Actual Quantity
Using the information given in the problem, we can calculate the material variance as follows:
Standard Cost of Materials = (4 x ` 16) + (8 x ` 18) = ` 160
Actual Cost of Materials = (6 x ` 9) + (7 x ` 15) = ` 123
Actual Quantity = 10 tons
Material Variance = (` 160 – ` 123) x 10 = ` 370
Therefore, the material variance is ` 370.
Explanation of Material Variance
Material variance is a measure of the difference between the standard cost of materials and the actual cost of materials used in the production process. It is used to measure the efficiency of the production process and to identify any variances that need to be addressed.
Material variance is calculated by comparing the actual cost of materials used with the standard cost of materials that should have been used based on the production plan. The variance can be positive or negative, indicating whether the actual cost of materials was higher or lower than expected.
There are two types of material variances:
1. Price Variance – This variance is caused by the difference between the actual price paid for materials and the standard price that was expected.
2. Usage Variance – This variance is caused by the difference between the actual quantity of materials used and the standard quantity that was expected.
In the problem given, the material variance is calculated based on the actual cost of materials used and the standard cost of materials that were expected. The variance is positive, indicating that the actual cost of materials was higher than expected.
Material variance is an important tool for cost control and management. By identifying and analyzing variances, managers can take corrective action to improve efficiency, reduce costs, and increase profitability.
The material variance is the difference between the standard cost of materials and the actual cost of materials used in the production process. The formula for material variance is:
Material Variance = (Standard Cost – Actual Cost) x Actual Quantity
Using the information given in the problem, we can calculate the material variance as follows:
Standard Cost of Materials = (4 x ` 16) + (8 x ` 18) = ` 160
Actual Cost of Materials = (6 x ` 9) + (7 x ` 15) = ` 123
Actual Quantity = 10 tons
Material Variance = (` 160 – ` 123) x 10 = ` 370
Therefore, the material variance is ` 370.
Explanation of Material Variance
Material variance is a measure of the difference between the standard cost of materials and the actual cost of materials used in the production process. It is used to measure the efficiency of the production process and to identify any variances that need to be addressed.
Material variance is calculated by comparing the actual cost of materials used with the standard cost of materials that should have been used based on the production plan. The variance can be positive or negative, indicating whether the actual cost of materials was higher or lower than expected.
There are two types of material variances:
1. Price Variance – This variance is caused by the difference between the actual price paid for materials and the standard price that was expected.
2. Usage Variance – This variance is caused by the difference between the actual quantity of materials used and the standard quantity that was expected.
In the problem given, the material variance is calculated based on the actual cost of materials used and the standard cost of materials that were expected. The variance is positive, indicating that the actual cost of materials was higher than expected.
Material variance is an important tool for cost control and management. By identifying and analyzing variances, managers can take corrective action to improve efficiency, reduce costs, and increase profitability.
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The standard cost of a chemical mix is as under : 4 tons of material A @ ` 16 per ton 8 tons of material B @ ` 18 per ton Standard yield is 80% of input. The actual cost for the period is as under : 6 tons of material A @ ` 9 per ton 7 tons of material B @ ` 15 per ton Actual yield is 10 tons. Compute Material Variance.?
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