Direct material usage variance, Cost Accounting

Assignment Help:

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:

930_Direct Material Usage Variance.png

               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.


Related Discussions:- Direct material usage variance

Assignment, what are the three of product costs in manufacturing company,di...

what are the three of product costs in manufacturing company,discuss in detail each and supporting with examples.

Capital expenditure budget, Capital Expenditure Budget This represent...

Capital Expenditure Budget This represents the expenditure on all fixed assets throughout the budget period.  Addition intended to profit future accounting periods, or expend

Calculate cost of goods sold under throughput costing, The follow data rela...

The follow data relates to year 20XX for Plano Manufacturing Company: Units produced - 2,000 Units sold - 1,800 Selling price - $200 / per unit Direct material costs - $80,000 Dire

Reserves and surplus, Reserves and surplus or retained earnings usually occ...

Reserves and surplus or retained earnings usually occur out of profitable operations. This is a surplus not distributed through the firm as dividends. Conversely, these are profits

Accounting records - nature and purpose of cost accounting, Accounting Reco...

Accounting Records - Nature and Purpose of Cost Accounting The quantitative information employed in the management and cost accounting systems can be obtained from with two ac

Journal entry for sale of machinery, Rayya Co. purchases and installs a mac...

Rayya Co. purchases and installs a machine on January 1, 2013, at a total cost of $105,000. Straight-line depreciation is taken each year for four years assuming a seven-year life

Calculate the nominal interest rate, A 1- year Canadian bond with a face va...

A 1- year Canadian bond with a face value of 5000 can be purchased at 4800. a) Calculate the nominal interest rate in Canada. b) If the Canadian dollar is expected to depreci

Variance analysis and standard costing, Variance Analysis and Standard Cost...

Variance Analysis and Standard Costing Standard costing is defined with CIMA like a technique that uses standards for revenues and costs for the purpose of control via varianc

Interest rates and adjust rates, The Federal Reserve adjusts short term int...

The Federal Reserve adjusts short term interest rates based upon their perceptions of the needs in the economy.  Please describe the ways the Federal Reserve can influence interest

Manufacturing Costs, Is there a way to figure out labor cost and factory i...

Is there a way to figure out labor cost and factory inventory when no direct information regarding them is available.

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd