Question 2 Greenco manufactures product G, which has a standard direct material cost per unit of:...

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Question 2 Greenco manufactures product G, which has a standard direct material cost per unit of: 5 kilos at $6 per kilo = $30. Actual output during a month is 4,000 units of product G, and the direct materials actually used in production were 16,500 kilos at a cost of $119,000. Following recent review of the market and production process, the management of Greenco believes that the current standard is incorrect and a more realistic standard cost should be: 4 kilos at $7 per kilo = $28. Required a) Calculate materials cost, price and usage variances based on a static standard cost for the materials. b) Analyse the total planning variance for materials cost into a planning variance for materials price and a planning variance for materials usage. c) Refer to your calculations above why might the manager responsible for production process resist the use of the revised standard to evaluate her/his performance? Question 2 Greenco manufactures product G, which has a standard direct material cost per unit of: 5 kilos at $6 per kilo = $30. Actual output during a month is 4,000 units of product G, and the direct materials actually used in production were 16,500 kilos at a cost of $119,000. Following recent review of the market and production process, the management of Greenco believes that the current standard is incorrect and a more realistic standard cost should be: 4 kilos at $7 per kilo = $28. Required a) Calculate materials cost, price and usage variances based on a static standard cost for the materials. b) Analyse the total planning variance for materials cost into a planning variance for materials price and a planning variance for materials usage. c) Refer to your calculations above why might the manager responsible for production process resist the use of the revised standard to evaluate her/his performance?

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Based on the information provided lets calculate the materials cost price and usage variances based on a static standard cost for the materials a Calculate materials cost price and usage variances 1 M... View the full answer