Materials variance

Question 1

What is materials variance?

Answer 1

It is the difference between the standard cost of materials for actual level of production and the actual cost of materials used

Question 2

Overall materials variance =

Answer 2

(standard quantity x standard price) - (actual quantity x

actual price)

Question 3

What is materials price sub-variance caused by?

Answer 3

It is caused by the actual price per unit of the materials used being different from the budgeted price per unit

Question 4

Materials price sub-variance =

Answer 4

Actual quantity x (standard price per unit - actual price

per unit)

Question 5

What is materials usage sub-variance caused by?

Answer 5

It is caused by the standard quantity of materials for the actual level of production being different from the actual quantity of materials.

Question 6

Materials usage sub-variance =

Answer 6

Standard price x (standard quantity - actual quantity)

Question 7

Overall materials variance 2 =

Answer 7

Materials price sub-variance + Materials usage

sub-variance