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DIRECT MATERIALS COST VARIANCE

6 五月, 2015 - 17:10

A direct materials cost variance is broken down into

  1. a quantity variance (whether or not too much material was used), and
  2. a price variance (whether or not the price was higher than anticipated).

A significant unfavorable materials quantity variance suggests the need to review the production process. A significant unfavorable materials price variance points at the purchasing department.