During November,10,000 units were produced.The standard quantity of material allowed per unit was 10 kg at a standard cost of $3 per kilogram.Suppose the company had an unfavourable usage variance of $18,750 for November.What would have been the actual quantity of materials used?

Question

Quizplus · Accepted Answer

To calculate the actual quantity of materials used, we first need to find the total variance (TV) using the following formula:

TV = (actual quantity of materials used x actual cost per kilogram) - (standard quantity of materials allowed x standard cost per kilogram)

We know TV = $18,750 (given in the question) and the standard quantity of materials allowed per unit is 10 kg. We also know that 10,000 units were produced in November. Therefore, we can rearrange the above formula to solve for the actual quantity of materials used (AQ):

AQ = (TV + (standard quantity of materials allowed x standard cost per kilogram) x number of units produced) / actual cost per kilogram

Plugging in the values:

AQ = ($18,750 + (10 kg x $3 per kg) x 10,000 units) / $3 per kg

AQ = ($18,750 + $300,000) / $3 per kg

AQ = 106,250 kg

Therefore, the actual quantity of materials used was 106,250 kg, which means the correct answer is D.

During November,10,000 Units Were Produced