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Material total variance

The material total variance compares standard material cost for actual output with actual material cost on a consistent usage basis. It combines price and usage effects, although a system recognising price variances on purchases must reconcile inventory movements before assuming a simple sum. The total shows the profit effect relative to standard, while the analysis helps identify interacting causes. Define the quantity and price bases rather than relying on an unexplained favourable/adverse label.

Worked example

Standard quantity 1,000 kg at $5 gives $5,000; actual usage 1,100 kg at $4.80 costs $5,280. Total is $280 adverse: $220 favourable price and $500 adverse usage.

Common mistake

A favourable price variance can accompany a larger adverse usage variance. Do not evaluate buying performance without checking material quality and waste.

Where it appears in your exams

QualificationExamRelationshipPeriod
ACCA MA Direct September 2026–June 2027
ACCA PM Supporting September 2026–June 2027
FIA FMA Direct September 2026–June 2027