# Usage variances

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Registered Posts: 20 New contributor ๐ธ
I am not getting the full understanding on the usage variance formula can someone please help here, thanks

• Registered Posts: 526 Epic contributor ๐
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Do you mean (standard quantity- actual quantity) x standard cost per unit used? Let us know what you're stuck on & we'll try & help.
• Registered Posts: 585 Epic contributor ๐
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Usage varience

If I were to look at material USAGE VARIENCE, I would be analysing how much ACTUAL material I have used compared to my EXPECTED material usage.

For example

a 90 gsm bread of loaf recipe requies 1 Egg.

During production of 5000 bread loafs 5200 eggs were used.

Material usage varience is ACTUAL Usage less EXPECTED usage

The Fourmula is Actual minus Expected

which is 5200 - (5000 x 1) = 200 Eggs ADVERSE (more then EXPECTED)

if usage were less the EXPECTED then the varience would be FAVOURABLE
• Registered Posts: 207 Dedicated contributor ๐ฆ
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nosaj wrote: ยป
I am not getting the full understanding on the usage variance formula can someone please help here, thanks

Material Usage variance? Which as AndyPandy said is (Total Standard Mat - Total Actual Mat) x Standard Rate Per element of Material for ex.. Kg.

You are simply measuring the material you "Should have used" for Actual production ie... Standard Usage, against the materials you actually used.

You then Multiply the difference by the amount (standard cost per kg) you should have paid.

If you Actually used more Materials - The difference is Adverse - Not Good
or
If You actually used less Materials - The Difference is Favouable - Very Good

I hope this helps.

Any further problems just Post it on as there is so many people on this site willing to help each other out!
• Registered, Moderator Posts: 2,034 mod
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On AAT exams for PEV and MAC the usage variance is the material usage variance.

Sammy your explanation would be tested on these papers as the labour efficiency variance

both are the (standard input for actual production - actual input) x the standard cost per unit of input
Sandy
sandy@sandyhood.com
www.sandyhood.com
• Registered Posts: 207 Dedicated contributor ๐ฆ
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On AAT exams for PEV and MAC the usage variance is the material usage variance.

Sammy your explanation would be tested on these papers as the labour efficiency variance

both are the (standard input for actual production - actual input) x the standard cost per unit of input