Direct material usage variance, Cost Accounting

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.

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







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
Related Questions


Learning Objective: After completing the project, the student will have gained familiarity, understanding and mastery of programming a realistic but simple application in Assembly

Now along with the illustration of Ramsons at hand, this is not tough for us to understand that Ramsons have invested the 'money to make money'. Where has Ramsons invested the mone

We have noticed that working capital is needed to finance that portion of current assets that is not financed through current liabilities. We also noticed that the investments repr

according to a factory cost ledger, job no 51 has incurred the following costs: direct material - 30

Costs and Revenue Cost of the development work done in-house to 1 January 2009 has been £1.5m with a further cost of £50,000 per month from now until the software is ready

Denair Fine Wines, Inc., is planning to bring out a higher-quality wine product than any currently available in Stanislaus county. They've decided on selling the blended, fortified

Explain:- Q Why is the statement of cash flows useful? Q. How is it possible for a company to suffer a net loss for a given year, yet produce a positive net cash flow from opera

what is planning and what part of this activity would you describe as planning in the situasion above