Problem #1 Use the following information about supply consumption to determine t
ID: 2573194 • Letter: P
Question
Problem #1 Use the following information about supply consumption to determine the us- age and price variances. The department is considered to be 100 percent variable with volume. Actual units of service were 8,100 compared with a budget of 9,000 Usage Dollar Amounts Actual Budget Actual 50 1,599 1,500 ,524 400411 426 180 93 348 30 114 $7,920 8,576 4,530 740 89,100 1,600 2,109 8,747 2,250 1,760 1,600 Item B Item C Item D ltem E Item F Item G Item H Item I Item J 450 100 74 350 30 120 6,972 4,983 748 83,164 2,740 2,655 8,707 2,245 5,792 $131,692 $120,631 6,120_ooExplanation / Answer
M1 = Actual cost of material used (Actual quantity of material used *Actual Rate)
Drug
Actual quantity used
Actual/unit
Total cost
A
1760
4.5
7920
B
1600
5.4
8576
C
1500
3.0
4530
D
400
1.9
740
E
450
198.0
89100
F
100
16.0
1600
G
74
28.5
2109
H
350
25.0
8747
I
30
75.0
2250
J
120
51.0
6120
Total = $131,692
M2 = Standard cost of material used (Actual quantity of material used*Standard rate specified for that material)
Drug
Actual
Standard/unit
Total standard cost
A
1760
3.5
6160.0
B
1600
4.4
6976.4
C
1500
3.3
4904.5
D
400
1.8
728.0
E
450
195.2
87849.3
F
100
15.2
1522.2
G
74
28.5
2112.6
H
350
25.0
8757.0
I
30
74.8
2245.0
J
120
50.8
6096.8
Total = $127,351.85
M4 = Standard materials cost of output (Standard quantity of material required for the specific output*Standard rate)
Drug
Standard quantity
Standard/unit
Total standard cost
A
750
3.5
2625
B
1599
4.4
6972
C
1524
3.3
4983
D
411
1.8
748
E
426
195.2
83164
F
180
15.2
2740
G
93
28.5
2655
H
348
25.0
8707
I
30
74.8
2245
J
114
50.8
5792
Total = $120,631
Material Usage Variance = M2-M4
= $120,631 - $127,351.85
=$6,720.85 Favourable
Material Price Variance = M1-M2
= $131,692-$127,351.85
= 4,340.15 Adverse
Drug
Actual quantity used
Actual/unit
Total cost
A
1760
4.5
7920
B
1600
5.4
8576
C
1500
3.0
4530
D
400
1.9
740
E
450
198.0
89100
F
100
16.0
1600
G
74
28.5
2109
H
350
25.0
8747
I
30
75.0
2250
J
120
51.0
6120
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