Fruit Ltd. produces “Mango Burst”, a popular beverage. It is reviewing their material costs for the month of March, 2025. Following data is…

CA Intermediate · Cost and Management Accounting · MTP · May 2026
Fruit Ltd. produces “Mango Burst”, a popular beverage. It is reviewing their material costs for the month of March, 2025. Following data is available : (i) Standard cost: Each bottle of "Mango Burst" should use 0.5 kg. of mangoes, costing 30 per kg. (ii) Actual production: 50,000 bottles of “Mango Burst”. (iii) Actual material usage: 26,000 kgs of mangoes. (iv) Actual material cost: The total cost of the mangoes used was - 7,67,000. You are required to CALCULATE: (i) Material Price Variance (ii) Material Usage Variance (iii) Material Cost Variance

Suggested Answer and Working Notes:

(i) Material Price Variance (MPV): MPV= (Std Price – Actual Price) x Actual Quantity Actual Price per Kg = Actual Cost / Actual Qty = 7,67,000 / 26,000 = 29.50 MPV = (30 -29.50) x 26,000 = 13,000 (Fav) (ii) Material Usage Variance (MUV): Std qty of Mangoes for Actual Output : Actual output x Std Qty per Unit Std Qty of Mangoes for Actual Output: 50,000 bottles x 0.5 kg/ bottle = 25, 000 kg MUV = (Std Qty – Actual Qty) x Std Price MUV = (25,000 -26,000) x 30 = 30,000 (Adv) (iii) Material Cost Variance (MCV): MCV = MPV + MUV MCV = 13,000 +(-30,000) = 17,000 (Adv)

Topics: Standard Costing

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