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

Evaluate the cost structure, The project (using the tools and techniques gi... The project (using the tools and techniques given in Chapters 3, 8, 10, 11, and 12 of the textbook) and its subsequent report are based on the complete economic analysis of a compa

How much are your fixed costs, 1.    The following table summarizes the sho... 1.    The following table summarizes the short-run production function for your firm. Your product sells for $5 per unit, labor costs $5 per unit, and the rental price of capital i

Contract costing, who to prepare contract account who to prepare contract account

Objective type question, 1. Pardee Company plans to sell 12,000 units durin... 1. Pardee Company plans to sell 12,000 units during the month of August. If the company has 2,500 units on hand at the start of the month, and plans to have 2,000 units on hand at

Break Even Analysis, A company manufactures a single product. Estimated cos... A company manufactures a single product. Estimated cost data regarding this product and other information for the product and the company are as follows: Sales price per unit Rs.2

Engineering method of cost estimation, Engineering Method of Cost Estimatio... Engineering Method of Cost Estimation This method is based on a detailed study of each operation whereas careful requirement is made for materials, labour and equipment essent

Determine the annual holding cost, A company produces three types of items.... A company produces three types of items. A single machine is used to produce the three items on a cyclical basis. The company has the policy that every item is produced once during

Prepare journal entries to record the budget, The budgeted and actual reven... The budgeted and actual revenues and expenditures of Seaside Township for a recent year (in millions) were as presented in the schedule that follows: 1. Prepare journal entries

Prepare a statement of financial balance sheet, The Accountant has also ask... The Accountant has also asked for you to assist in preparing the statement of financial position (balance sheet) for the Construction in Building partnership for the year ended 30

Managerial accounting, Classic Coolers manufactures portable coolers adorne... Classic Coolers manufactures portable coolers adorned with college logos. During the first quarter of the year, the company had the following costs: Direct materials used $55,500 D