COST AND MANAGEMENT

ACCOUNTING

TOPIC:-
TYPES OF MATERIAL VARIANCES
 MATERIAL COST VARIANCES

 MATERIAL PRICE VARIANCE

 MATERIAL USAGE VARIANCE

MATERIAL MIX VARIANCE

 MATERIAL YIELD VARIANCE

 MATERIAL COST VARIANCE

Material cost variance =

standard cost of actual output – actual cost

MCV = SC - AC
SC = (SQ × SP)

AC =(AQ × AP)
SQ = standard quantity for actual output

SP = standard price

AQ = actual quantity

AP = actual price
MATERIAL PRICE VARIANCE

MPV = (SP – AP) × AQ

REASONS :-

 change in the market prices of materials

 inefficient purchasing

 change in the delivery costs

 failure to purchase the specified quality

 rush purchases
 MATERIAL USAGE VARIANCE

MUV = (SQ-AQ) × SP
REASONS :-

 use of defective or sub-standard materials

 carelessness in the use of materials

 poor workmanship

 defect in plant and machinery

 change in the design of the product

 change in the quality of materials

  material mix variance

 material yield variance

Material mix variance

MMV= (RSQ-SQ) × SP

standard quantity of one material total of actual quantities

RSQ = × of all materials
Total of standard quantities of all materials
Material yield variance

MVP = (AY – SY) × SOP

AY = actual yield

SY = standard yield

SOP = standard output price

Thank you