The direct materials price and quantity variances have special significance in economics.
Direct materials quantity variance is a part of the overall materials cost variance that occurs due to the difference between the actual quantity of direct materials used and the standard quantity allowed for the output. Direct materials quantity variance is also known as direct material usage or volume variance.
To find the materials quantity variance, use the following formula:
Materials Quantity Variance = (Standard Quantity Units – Actual Quantity Units ) ✕ Standard Cost Per Unit.
Materials Quantity Variance = (Standard Quantity Units – Actual Quantity Units ) ✕ Standard Cost Per Unit.
60 pounds for cakes + 15 pounds dropped.
A quantity variance is a difference between the actual usage of something and its expected usage. For example, if a standard quantity of 10 pounds of iron is needed to construct a widget, but 11 pounds are actually used, then there is a quantity variance of one pound of iron.
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