Product A requires IO kgs of material at the rate of Rs. 5 per kg. The actual consumption of material…
Direct Material Cost Variance (MCV) equals Standard Cost for actual output (SQ x SP) minus Actual Cost (AQ x AP). Here, Standard Cost = 10 kg x Rs. 5 = Rs. 50, and Actual…
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Product A requires IO kgs of material at the rate of Rs. 5 per kg. The actual consumption of material for the manufacturing of product A comes to 12 kg of material at the rate of Rs. 6 per kg. Direct material cot variance is
Answer and explanation
Correct answer B
Direct Material Cost Variance (MCV) equals Standard Cost for actual output (SQ x SP) minus Actual Cost (AQ x AP). Here, Standard Cost = 10 kg x Rs. 5 = Rs. 50, and Actual Cost = 12 kg x Rs. 6 = Rs. 72; therefore, Material Cost Variance = Rs. 50 - Rs. 72 = Rs. 22 (Unfavourable/Adverse).
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UGC NET Commerce