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Material Usage Variance= SR (SQ-AQ)
Material Price Variance= AQ (SR-AR)..
why is the common rate SR in first one and not AR,
and why is the common qty AQ in the second one and not SQ?????AQ * AP
The difference is on the price – actual qty stays the same
Did we pay more than we should have or less for the actual qty usedAQ * SP
The difference is on the quantity – std price stays the same
Did we use more than we should have at the standard price.
With variances only one thing can change at a time.Au * SQ * SP.
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