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Calculate the total raw material variance for june

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Reference no: EM133188347

Question - Comécart manufactures and sells a single product from a single raw material.

In its production budget, the company had planned to manufacture 2,200 units of this product in June. Based on consumption in previous months using its usual supplier, it had planned that the manufacture of each unit would consume 4kg of raw material at €8/kg, giving a raw material cost of €32 per unit produced. 

In reality, the company produced 2,230 units of finished product in June. It called on a new supplier who charged €8.20 per kg for a better quality raw material than the usual supplier. The cost of this raw material in June was €71,299.

Required - Calculate the total raw material variance for June and break it down into sub-variances. How do you interpret the results of your calculations? Do you advise keeping the new supplier?

Reference no: EM133188347

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