COST ACCOUNTING
STANDARD COSTING AND VARIANCE ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A product requires raw material costing $0.5 per kg. In February 2, 500 kgs of raw material were purchased at a cost of $1, 500. 2, 300 kgs of raw material were used.Raw material inventory is valued at standard cost and there was no opening inventory of raw material.What was the materials price variance for February?
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$250 adverse
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$230 adverse
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$230 favourable
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$250 favourable
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Explanation:
Detailed explanation-1: -Beginning Raw Materials Inventory = (COGS + Ending Raw Materials Inventory) – Raw Materials Inventory Purchases. For example, imagine a manufacturer produces lanterns using iron. Iron costs $50 a unit, and the business ended the last accounting period with 1, 000 units in stock.
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