Product A requires 10 kg of material at the rate of Rs. 5 per kg. The actual consumption of material for the manufacturing of product A comes to 12 kg of material at the rate of Rs. 6 per kg. Direct material cost variance is

The correct answer is: D. Rs. 12 (unfavourable)

The direct material cost variance is calculated as follows:

Direct material cost variance = (Actual quantity used – Standard quantity allowed) x Standard price

In this case, the actual quantity used is 12 kg, the standard quantity allowed is 10 kg, and the standard price is Rs. 5 per kg. Therefore, the direct material cost variance is:

Direct material cost variance = (12 kg – 10 kg) x Rs. 5 per kg = Rs. 12 (unfavourable)

This means that the company used 2 kg