Page 281 - P1 Integrated Workbook STUDENT 2018

Supplementary objective test questions

3.6 The following extract from a standard cost card shows the materials to be used
in producing 100 litres of an agricultural fertiliser:

Material A 20 litres @ $6.00 per litre
Material B 60 litres @ $0.50 per litre
Material C 40 litres @ $3.00 per litre

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In month 4, 7,500 litres of the agricultural fertiliser were produced using the
following materials:
Material A 1,800 litres

Material B 4,700 litres
Material C 3,100 litres

Using the individual units method, what is the total value of the materials
mix variance for month 4?

A $850 favourable

B $850 adverse

C $1,020 favourable

D $1,020 adverse

3.7 An organisation pays the minimum acceptable labour rate to its staff of $22 per
hour. Each unit produced requires 5 hours of labour.

In Month 6, budgeted production was 400 units and actual production was
500 units. $57,575 was actually spent on 2,450 hours of labour.

It has subsequently been noted that the minimum acceptable hourly rate of
labour should have been set at $23 per hour.

What is the labour rate operational variance for Month 6?

A $1,225 adverse

B $1,500 adverse

C $2,450 adverse

D $3675 adverse

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