Material variances can be of the following categories:
● Material Cost Variance
● Material Price Variance
● Material Usage Variance
● Material Mix Variance
● Material Yield Variance
| Material Cost Variance | |
| Standard cost of materials for actual output – Actual cost of material used OrMaterial price variance + Material usage or quantity varianceOrMaterial price variance + Material mix variance + Material yield variance | |
| Material Price Variance | |
| Actual usage ( Standard Quantity Price – Actual Unit Price)Actual Usage = Actual Quantity of material (in units) usedStandard Unit Price = Standard Price of material per unitActual Unit Price = Actual price of material per unit | |
| Material Usage or Quantity Variance | |
| Material usage or Quantity variance : Standard price per unit (Standard Quantity – Actual Quantity ) | |
| Material Mix Variance | |
| Material mix variance arises due to the difference between the standard mixture of material and the actual mixture of Material mix.Material Mix variance is calculated as a difference between the standard prices of standard mix and the standard price of actual mix.If there is no difference between the standard and the actual weight of mix, then:Standard unit cost (Standard Quantity – Actual Quantity )OrStandard Cost of Standard Mix – Standard cost of Actual MixSometimes due to shortage of a particular type of material, standard is revised; then:Standard unit cost (Revised Standard Quantity – Actual Quantity)OrStandard cost of revised Standard Mix – Standard Cost of Actual mixIf the actual weight of mix differs from the standard weight of mix, then:Standard cost of revised standard mix ×Total weight of actual mixmixTotal weight of revised standard mix | |
| Material Yield Variance | |
| When the standard and the actual mix do not differ, thenYield Variance = Standard Rate × (Actual Yield – Standard Yield)Standard Rate =Standard cost of standard mixNet standard output (i.e.Gross output−Standard loss) |
