Business – 5.5 Budgets – Variances | e-Consult
5.5 Budgets – Variances (1 questions)
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Answer:
Material Cost Variance = Actual Cost – Budgeted Cost
| Actual Cost | £52,500 |
| Budgeted Cost | £45,000 |
| Variance | £7,500 Unfavourable |
The variance is unfavourable because the actual cost exceeds the budgeted amount. This suggests that the company’s cost control over raw material purchases was weak in June, possibly due to higher prices, waste, or inefficiencies.