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Hi,
In Labour Variances there is a variance for unproductive idle time (or time wasted) and there is a cost attached to this.
In Materials Variances, there doesn’t appear to be a variance that takes into account unavoidable material waste, the opposite of expected yield.
For example, the product is a circular tablecloth 1m in diameter. This has to be cut from a piece of fabric that is 1m square.
The circular shape cut out of the square shape will produce unavoidable waste at the four corners of the square fabric.
But it seems that only the cloth that is yielded by the square fabric is counted and costed in the direct materials cost, the unavoidable waste doesn’t appear to have a variance, and therefore a cost, attached to it – in the way that idle time in labour variances do.
I’m not clear how the materials usage variance takes into account the expected yield, and also the unavoidable waste?
Should there be an ‘expected wastage’ variance in the same vein as the idle time variance?
In future you must ask in the Ask the Tutor Forum if you are wanting me to answer. This forum is for students to help each other.
You make a good point, but in Paper MA there is no waste/yield variance for materials. (You will find that there is later when you come to Paper PM)
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