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Question - BB uses the following rule to determine whether materials usage variances should be investigated: A materials usage variance will be investigated when the variance is greater than either $5,000 or 12% of the standard cost. During May, the company purchased and used 11,000 kg of concrete for $5 per kilogram. It was able to make 20,000 bricks. Its standard quantity of materials allowed is 0.50 kg of concrete per brick at a standard price of $6.50 per kilogram.
Required - Show your calculations
a. Determine Bronze's material usage variance and whether it is favorable or unfavorable.
b. Should the variance be investigated?
c. Name two possible reasons for such a variance.
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