UGC NET COMMERCE June 2019 Q34

34Product A requires 10 kg of material at the rate of Rs.5 per kg. The actual consumption of material for the manufacturing of product A comes to 12 kg of material at the rate of Rs.6 per kg. Direct material cost variance is:

Option : B
Explanation : Material Cost Variance = Standard Cost for Actual Output – Actual Cost
= (SP × SQ) – (AP × AQ)
= (5 × 10) – (6 × 12) = 50 – 72
= Rs.22 (Unfavourable or Adverse).

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