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

Cost Classification, What are the importance of cost classification

What are the importance of cost classification

Limitations of budgeting, Limitations of Budgeting 1. Too mush relian...

Limitations of Budgeting 1. Too mush reliance may reason resistance or inflexibility to change. 2. Difficult to set levels of attainment. It may result into too tight budg

Calculate the optimal re-order quantity, Mr. Marley is a wholesaler who buy...

Mr. Marley is a wholesaler who buys and sells a wide range of products, one of which is the Laker. Mr. Marley sells 24,000 units of the Laker each year at a unit price $20. Sales o

Example of profit volume graph, Example of Profit Volume Graph The sum...

Example of Profit Volume Graph The summary results of a company are given as: Product                        A B          C

Cash, This is difficult to perceive cash maintained in the vault as an inve...

This is difficult to perceive cash maintained in the vault as an investment. Fairly, you would be thinking that if we invest cash, then how can cash itself be an investment? Howeve

Assignment, what do you understand by cost accounting and what are the main...

what do you understand by cost accounting and what are the main decision areas that are involved

Business management, Business Management Business Management includes ...

Business Management Business Management includes planning and staffing, organizing, directing and controlling an organization's activities so like to meet a specified objectiv

Differential costing, What do you mean by differential costing ? How it dif...

What do you mean by differential costing ? How it differ from marginal costing ? explain its practical application with examples?

Traditional Costing System and Job Order Costing System, Hello, I''m curren...

Hello, I''m currently doing a research on a company and planning an Activity Based Costing system since the company is using Traditional Costing system to allocate the overhead to

Cost of airconditioning plant, Devprop Leasing Co.is an industrial property...

Devprop Leasing Co.is an industrial property development company, that typically develops warehouse and industrial complexes in new or underdeveloped areas, operates these complexe

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