Direct Material Variance

Material variances can be of the following categories:

●      Material Cost Variance

●      Material Price Variance

●      Material Usage Variance

●      Material Mix Variance

●      Material Yield Variance

Material Cost Variance 
Standard cost of materials for actual output – Actual cost of material used                                                                     OrMaterial price variance + Material usage or quantity varianceOrMaterial price variance + Material mix variance + Material yield variance 
Material Price Variance 
Actual usage ( Standard Quantity Price – Actual Unit Price)Actual Usage = Actual Quantity of material (in units) usedStandard Unit Price = Standard Price of material per unitActual Unit Price = Actual price of material per unit 
Material Usage or Quantity Variance 
Material usage or Quantity variance : Standard price per unit (Standard Quantity – Actual Quantity ) 
Material Mix Variance 
Material mix variance arises due to the difference between the standard mixture of material and the actual mixture of Material mix.Material Mix variance is calculated as a difference between the standard prices of standard mix and the standard price of actual mix.If there is no difference between the standard and the actual weight of mix, then:Standard unit cost (Standard Quantity – Actual Quantity )OrStandard Cost of Standard Mix – Standard cost of Actual MixSometimes due to shortage of a particular type of material, standard is revised; then:Standard unit cost (Revised Standard Quantity – Actual Quantity)OrStandard cost of revised Standard Mix – Standard Cost of Actual mixIf the actual weight of mix differs from the standard weight of mix, then:Standard cost of revised standard mix ×Total weight of actual mixmixTotal weight of revised standard mix 
Material Yield Variance 
When the standard and the actual mix do not differ, thenYield Variance = Standard Rate × (Actual Yield – Standard Yield)Standard Rate =Standard cost of standard mixNet standard output (i.e.Gross output−Standard loss) 

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