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.Suppose the actual cost was $87 per kilogram and Risco purchased 27,500 kg of steel.All materials purchased were used.What was Risco's materials usage variance?
A)$10,500 U
B)$10,500 F
C)$13,500 U
D)$13,500 F

Question

Quizplus · Accepted Answer

First, we need to calculate the standard quantity of materials that should have been used:
13,000 blades x 21.5 kg per blade = 279,500 kg of steel

Next, we can calculate the standard cost of the material used:
279,500 kg x $98 per kg = $27,371,000

Now we can calculate the actual cost of the material used:
27,500 kg x $87 per kg = $2,397,500

Finally, we can calculate the materials usage variance:
Materials usage variance = (standard quantity of materials - actual quantity of materials) x standard cost per unit
Materials usage variance = (279,500 kg - 27,500 kg) x $98 per kg = $13,500 U

Therefore, the answer is C).

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