Material Price and Usage Variance


Direct Material Variances

The total direct material cost variance for actual output can basically be divided into two types, namely (a) price variance and (b) usage variance. The method of calculating these variances is as under:

Price and Usage Variance
Material Variances

Material Price variance= (Actual Price-Standard Price)*Actual Quantity

Material Usage variance= (Actual Quantity-Standard Quantity)*Standard Price

Variance may be favorable or unfavorable at any point of time depending on several controllable and uncontrollable factors. 
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