Calculate the material variances including cost, price, and usage based on the provided data.

Steps to Solve

1. Determine Standard Material Cost per Unit

The standard material required for one unit of product X is 10 kg, and the standard price per kg is calculated from the total cost provided.

Total standard cost = Rs. 156,000 for 24,000 kg.

Standard price per kg is: $$ \text{Standard Price} = \frac{156,000}{24,000} = Rs. 6 $$

2. Calculate Material Price Variance (MPV)

MPV measures the difference between the actual cost and the expected standard cost of the actual quantity used.

Actual quantity used = 24,000 kg
Actual cost = Rs. 156,000
Expected cost at standard price: $$ \text{Expected Cost} = \text{Actual Quantity} \times \text{Standard Price} = 24,000 \times 6 = Rs. 144,000 $$

MPV is calculated as: $$ \text{MPV} = \text{Actual Cost} - \text{Expected Cost} = 156,000 - 144,000 = Rs. 12,000 \ \text{(Unfavorable)} $$

3. Calculate Material Usage Variance (MUV)

MUV measures the difference between the actual quantity used and the standard quantity allowed for actual production.

Standard quantity allowed for actual production: $$ \text{Standard Quantity} = \text{Units Produced} \times \text{Standard Material per Unit} = 2,000 \times 10 = 20,000 \text{ kg} $$

MUV is: $$ \text{MUV} = \text{Actual Quantity} - \text{Standard Quantity} = 24,000 - 20,000 = Rs. 4,000 \ \text{(Unfavorable)} $$

4. Calculate Total Material Variance

Total material variance combines both variances. $$ \text{Total Material Variance} = \text{MPV} + \text{MUV} = 12,000 + 4,000 = Rs. 16,000 \ \text{(Unfavorable)} $$