Refer to Risco Company. Suppose the actual cost was $87 per kilogram and the company purchased 27,500 kg of steel. All materials purchased were used. What is the materials usage variance?

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Quizplus · Accepted Answer

The materials usage variance is calculated as the difference between the actual cost of materials used and the standard cost of materials used. In this case, the actual cost of materials used is $87 per kilogram * 27,500 kg = $2,382,500. The standard cost of materials used is $75 per kilogram * 27,500 kg = $2,062,500. Therefore, the materials usage variance is $2,382,500 - $2,062,500 = $320,000 U.