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Answer :
KCL Manufacturing's materials price variance for May is £3,000 favorable.
To calculate the materials price variance for KCL Manufacturing for the month of May, we use the following steps:
1. Determine the actual cost per kilo of raw material.
Actual Cost Per Kilo: The company purchased 15,000 kilos for £19,500:
Actual Cost Per Kilo = £19,500 / 15,000 kilos = £1.30 per kilo
2. Calculate the total actual cost and the standard cost.
Standard Cost: The standard cost per kilo is estimated at £1.50.
3. Find the price variance.
Material Price Variance Calculation:
Variance = (Standard Cost Per Kilo - Actual Cost Per Kilo) x Quantity Purchased
Variance = (£1.50 - £1.30) x 15,000 kilos = £0.20 x 15,000 = £3,000 Favorable
The materials price variance for May is £3,000 Favorable.
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