Material Usage Variance Formula

Material Usage Variance Formula

Material usage variance is difference between standard quantity and actual quantity and such difference is measured at standard cost. Material usage variance may be favorable or adverse.

Material usage Variance = Standard Price x (Standard Quantity- Actual Quantity).

Example

Actual Quantity Consumed = 5000 kg

Per unit Standard Price of material A = $ 8

Units produced=1000

Standard usage per unit = 6 kg

Price of Material = 40,000

Calculate Material Price Variance

Solution

Standard consumption = Units produced x standard usage

=1000 x 6

=6,000 kg

$ 8 x (6000-5000)

= $ 8 x 1000

= $8000 (material usage variance)