• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

Material variance logic

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Material variance logic

  • This topic has 3 replies, 2 voices, and was last updated 12 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • November 14, 2012 at 9:25 pm #55269
    nomantufail
    Member
    • Topics: 17
    • Replies: 13
    • ☆

    I need to understand variance formulae
    Material usage variance is calculated as “quantity differential valued at standard price”.

    Quantity differencial is logical but why “standard price” and why not “actual price”.

    Similarly, Material price variance is calculated as “price differencial valued at actual quantity”.

    price differencial is logical but why “actual quantity” and why not “standard quantity”.
    Thanks and regards

    November 14, 2012 at 9:49 pm #107281
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    We are trying to look at the effect of changes in the two things separately.

    So for usage variance, we imagine that all that changes is the usage (and therefore cost out at the standard price).

    Having changed the quantity, we now want to look at the effect of paying the wrong price, which is why we cost out using the same (actual) quantity.

    (And of course, to convince yourself, the total of the price and usage variances will equal the total materials variance which you can calculate separately (although don’t waste time doing this in the exam))

    November 14, 2012 at 10:14 pm #107282
    nomantufail
    Member
    • Topics: 17
    • Replies: 13
    • ☆

    Thanks for your reply
    But why we have started from usage variance and then price variance. I mean to say that if this logic is right then it would make no difference if we say that.

    For price variance, we imagine that all that changes is the price (and therefore cost out at the standard quantity).

    Having changed the price, we now want to look at the effect of using the wrong quantity, which is why we cost out using the same (actual) price.
    Am i thinking right ?
    Thanx and regards
    Noman tufail

    November 15, 2012 at 2:49 pm #107283
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    You could do it that way round, but the standard way (and the way expected in the exam) is the way I wrote before. (If you did it the other way round, the variances would be different, even though the total would be the same.)

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • julio99 on Impairments – Impairment (CGU) – ACCA Financial Reporting (FR)
  • effy.sithole@gmail.com on EPS – diluted EPS Example – ACCA Financial Reporting (FR)
  • Ken Garrett on The Finance Function in the Digital Age – CIMA E1
  • DeborahProspect on ACCA SBR Specimen Exam 2 Question 1
  • darshan.69 on Chapter 9 Pension Schemes TX-UK FA2023

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in