The total cost variance is the different between the actual cost and the standard cost of the actual production. Just as with basic Paper F2 variances, the material price variance is just one part of the analysis of the total cost variance.

Sir, Will you please explain that why usage variance is calculated by adding mix variance and yield variance and not simply just in the following way: ACTUAL MATERIAL USED=15200 KG STANDARD MATERIAL THAT SHOULD BE USED =15000KG =(200KG)(ADVERSE) (133kg of X and 67 kg of Y) i.e.$533(ADVERSE) Thanks in advance.

Sorry it is 200kg(adverse)i.e.200dollars only. Answer is similar from this method also. But the question is why is it yield variance +mix variance=Usage variance??? Sorry again for the inconvenience caused.

As with all expenses, the total variance is the difference between the actual total cost and the standard total cost for the actual production. The expenditure variance only looks at the effect of a change in the purchase price, which is one part of the analysis of the total variance.

abhishekbakshi says

sir is expenditure variance and price variance the same ?

John Moffat says

Yes – they both mean the same 馃檪

fani92 says

Dear sir, isn’t Total Material Cost Variance and the Material Price Variance the same thing??

John Moffat says

No it isn’t.

The total cost variance is the different between the actual cost and the standard cost of the actual production. Just as with basic Paper F2 variances, the material price variance is just one part of the analysis of the total cost variance.

nitika says

Sir,

Will you please explain that why usage variance is calculated by adding mix variance and yield variance and not simply just in the following way:

ACTUAL MATERIAL USED=15200 KG

STANDARD MATERIAL THAT SHOULD BE USED =15000KG

=(200KG)(ADVERSE)

(133kg of X and 67 kg of Y)

i.e.$533(ADVERSE)

Thanks in advance.

nitika says

Sorry it is 200kg(adverse)i.e.200dollars only.

Answer is similar from this method also.

But the question is why is it yield variance +mix variance=Usage variance???

Sorry again for the inconvenience caused.

John Moffat says

You can calculate it either way – that doesn’t matter. The yield and mix variances are analysing the reasons why the usage is different from standard.

nitika says

Thanks a lot

John Moffat says

You are welcome 馃檪

samijaz says

dear sir great lecture, doing great job.god bless u love and respect from pakistan. 馃檪

John Moffat says

Thank you for your comment 馃檪

studyhard93 says

my apologies

sadakath1997 says

Hi

Could you please clarify the difference between Total Variance and Expenditure Variance ?

John Moffat says

As with all expenses, the total variance is the difference between the actual total cost and the standard total cost for the actual production.

The expenditure variance only looks at the effect of a change in the purchase price, which is one part of the analysis of the total variance.