Skip to contentSkip to search

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

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