During April, Risco Company produced 13,00012,000 chainsaw blades. The standard quantity of material allowed per unit was 21.5 kg of steel per blade at a standard cost of $98 per kilogram.
-Refer to the Figure.Risco determined that it had a favourable materials usage variance of $2,0001,000 for April.What was the actual quantity of materials Risco used?
A)11,875 kg
B)12,125 kg
C)25,778 kg
D)27,778 kg

Question

Quizplus · Accepted Answer

The actual quantity of materials used can be calculated by first determining the standard cost of materials allowed for the actual production, then adjusting for the variance. The standard quantity allowed for the actual production is 13,000 blades * 21.5 kg/blade = 279,500 kg. The standard cost for this quantity is 279,500 kg * $98/kg = $27,391,000. Since there is a favourable variance of $2,000, the actual cost spent on materials is $27,391,000 - $2,000 = $27,389,000. To find the actual quantity used at the standard cost per kilogram, divide the actual cost by the standard cost per kilogram: $27,389,000 / $98/kg = 279,276 kg. However, without the exact cost calculations and given the options, the closest approach to find the actual quantity is through understanding that a favourable variance means less material was used than the standard allowed. Given the options and the context, none directly align with the calculated figure, suggesting a need to reevaluate the approach based on the provided options and the variance information. Given the misunderstanding in the calculation explanation above and focusing on the provided information and options, the correct approach to find the actual quantity used involves understanding the relationship between the standard cost, the variance, and the actual quantity used. The favourable variance indicates that the actual quantity of materials used was less than the standard quantity allowed for the actual production. However, without direct calculation steps provided in the options or a clear path from the variance to the actual quantity, the correct answer hinges on understanding the variance's impact on material usage and the standard quantities and costs provided. The calculation error above misinterprets the variance's application to the total cost rather than its direct indication of material usage efficiency. Correctly applying the variance to understand material usage would involve adjusting the standard quantity by the efficiency indicated by the variance, but the provided explanation inaccurately calculates total cost and misapplies the variance to this total.

During April, Risco Company Produced 13,00012,000 Chainsaw Blades