Direct Material Usage Variance

Refers to the difference among the actual quantity utilized and the standard quantity particular for the actual production, all valued at the standard purchase price. Again it is represented given as diagrammatically:

               Actual Quantity x Standard Price                               Standard Quantity x Standard Price

The above diagram can be signifying using equations given as:

Direct Material = (Actual Quantity x Standard Price) - (Standard Price Usage x Standard Variance Quantity)

                      = (AQ x SP) - (SP x SQ)

Factoring out the standard price (SP) from the above equation provides us the specified equation as:

Direct material usage variance = (AQ - SQ) SP

This is again clear about the direct material usage variance arises because of the production department utilizing more materials than expected the standard.

Posted Date: 2/7/2013 6:37:25 AM | Location : United States

Ask an Expert

Related Discussions:- Direct material usage variance, Assignment Help, Ask Question on Direct material usage variance, Get Answer, Expert's Help, Direct material usage variance Discussions

Write discussion on Direct material usage variance
Your posts are moderated

Write your message here..

Related Questions

#title.basic pay, how do you calculate them how do you calculate them

Calculate the break-even in units under each option, o locate a store, but ... o locate a store, but the location manager is not sure about the rent method to accept. The mall operator offers the following three options for its retail store rentals: 1. paying

Compute the equivalent units of production for materials, Clopack Company m... Clopack Company manufactures one product that goes through one processing department called Mixing. All raw materials are introduced at the start of work in the Mixing Department.

Find out maximum cost-recovery deduction, The Gladys Corporation buys offic... The Gladys Corporation buys office equipment costing $426,000 on May 12, 2013. In 2015, new and improved models of the equipment make it obsolete, and Gladys sells the old equipme

Allocation of scarce resourses, LaNora White received her accounting degree... LaNora White received her accounting degree in 1992. Since graduating, she has obtained significant experience in a variety of job settings. Her skills include auditing, income and

Determine the direct materials cost variance, Question P A RT A ... Question P A RT A Borrico ltd manufacture a single product and they had currently introduced a system of budgeting and variance analysis. The subsequent information i

Features of effective cost center framework, Features of Effective Cost Cen... Features of Effective Cost Center Framework During the establishing cost centers, an organization must consider the given points as: a) Clear definition about the cost cent

Example of batch costing, Example of Batch Costing The budgeted variab... Example of Batch Costing The budgeted variable overheads of a company for the year of 2001 are as given as: Department                Overhead (shs.)

What are the variable expenses per unit, Superior Door Company sells pre-hu... Superior Door Company sells pre-hung doors to home builders. The doors are sold for $60 each. Variable costs are $42 per door and fixed costs total $450,000 per year. The company i

What is the overhead variance, Morrow Company applies overhead based on dir... Morrow Company applies overhead based on direct labor hours. At the beginning of the year, Morrow estimates overhead to be $620,000, machine hours to be 180,000, and direct labor h