Materials Usage Variance Calculation

Formula:
$\text{Materials Usage Variance} = (\text{Standard Quantity} - \text{Actual Quantity}) \times \text{Standard Price per kg}$

Step 1: Calculate Standard Quantity Allowed for Actual Production
$\text{Standard Quantity} = \text{Standard kg per unit} \times \text{Actual units produced}$
$\text{Standard Quantity} = 16 \, \text{kg} \times 4,130 = 66,080 \, \text{kg}$

Step 2: Calculate Actual Quantity Used
$\text{Actual Quantity} = \text{Actual kg per unit} \times \text{Actual units produced}$
$\text{Actual Quantity} = 14.4 \, \text{kg} \times 4,130 = 59,472 \, \text{kg}$

Step 3: Standard Price per kg
$\text{Standard Price per kg} = \frac{\text{Standard Cost per Unit for Materials}}{\text{Standard kg per unit}} = \frac{67.20}{16} = 4.20 \, \text{per kg}$

Step 4: Apply the Formula
$\text{Materials Usage Variance} = (66,080 - 59,472) \times 4.20$
$\text{Materials Usage Variance} = 6,608 \times 4.20 = 27,753.60$

Result:
$\boxed{£27,753.60 \, \text{Favourable}}$

Would you like a detailed explanation of why this variance is favourable?

Related Questions:

1. What is the materials price variance for the first quarter of 2024?
2. How is the labour efficiency variance calculated in this scenario?
3. What impact did the actual fixed overheads have on overall profitability?
4. How does the contribution margin per unit differ between standard and actual results?
5. What strategies could Muriel Ltd use to further improve material efficiency?

Tip:
A favourable usage variance suggests efficient use of materials, but it's essential to check if this efficiency affected product quality.