direct materials usage variance


direct materials usage variance
In a standard costing system, a variance arising as part of the direct materials total cost variance. It compares the actual quantity of material used to carry out production with the standard quantity allowed, and values the difference at the standard material price per unit. The resultant adverse or favourable variance is the amount by which the budgeted profit is affected by virtue of material usage. The formula for this variance is:
(standard quantity of material allowed for production – actual quantity used) × standard price per unit of material.

Accounting dictionary. 2014.

Look at other dictionaries:

  • direct materials yield variance — direct materials quantity variance In standard costing systems, part of the direct materials usage variance; it is the difference between the total standard quantity of material allowed for a process in standard proportions (see standard mix) and …   Accounting dictionary

  • direct materials mix variance — In standard costing systems, part of the direct materials usage variance; it is the difference between the total material used in standard proportions (see standard mix) and the material used in actual proportions, valued at standard prices (see… …   Accounting dictionary

  • Direct material usage variance — In variance analysis (accounting) direct material usage (efficiency, quantity) variance is the difference between the standard quantity of materials that should have been used for the number of units actually produced, and the actual quantity of… …   Wikipedia

  • direct materials total cost variance — A combination of the direct materials price variance and the direct materials usage variance; it compares the actual cost and the standard cost of the direct material consumed in carrying out the actual production. The formula for this variance… …   Accounting dictionary

  • usage variance — See: direct materials usage variance …   Accounting dictionary

  • Direct materials cost — is the cost of direct materials which can be easily identified with the unit of production. For example, the cost of glass is a direct materials cost in light bulb manufacturing[1]. The manufacture of products or goods required material as the… …   Wikipedia

  • standard materials usage — A predetermined quantity of materials to be used in the production of a product, which is ultimately compared with the actual quantity of material used to provide a basis for material control. The difference between standard and actual usage is… …   Accounting dictionary

  • standard materials usage — In standard costing, a predetermined quantity of materials to be used in the manufacture of a product; this is compared with actual usage of direct materials to calculate any variance …   Big dictionary of business and management

  • materials variances — See: direct materials price variance, direct materials total cost variance, direct materials usage variance …   Accounting dictionary

  • Conditional budgeting — is a budgeting approach designed for companies with fluctuating income, high fixed costs, or income depending on sunk costs, as well as NPOs and NGOs. The approach builds on the strengths of proven budgeting approaches, leverages the respective… …   Wikipedia