Material usage variance
The material usage variance values the difference between standard quantity allowed for actual output and actual quantity used at the standard price. With favourable-positive convention, it is (standard quantity for actual output − actual usage) × standard price. It can reflect waste, quality, process efficiency, mix or standard-setting issues. In a multi-material process it may be analysed into mix and yield effects, which should reconcile on a consistent basis.
Worked example
Actual output allows 2,000 kg at standard $3. Actual use is 2,100 kg. Usage variance is (2,000 − 2,100) × $3 = $300 adverse.
Common mistake
The standard quantity must relate to actual output, not budgeted output. Do not value the quantity difference at actual price.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | MA | Direct | September 2026–June 2027 |
| ACCA | PM | Direct | September 2026–June 2027 |
| FIA | FMA | Direct | September 2026–June 2027 |
