Usage variances

Options
nosaj
nosaj Registered Posts: 20 New contributor 🐸
I am not getting the full understanding on the usage variance formula can someone please help here, thanks

Comments

  • Andypandy
    Andypandy Registered Posts: 526 Epic contributor 🐘
    Options
    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.
  • sdv
    sdv Registered Posts: 585 Epic contributor 🐘
    Options
    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
  • sammyd22
    sammyd22 Registered Posts: 207 Dedicated contributor 🦉
    Options
    nosaj wrote: »
    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!
  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034 mod
    Options
    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
    so your explanation is very helpful
    Sandy
    sandy@sandyhood.com
    www.sandyhood.com
  • sammyd22
    sammyd22 Registered Posts: 207 Dedicated contributor 🦉
    Options
    SandyHood wrote: »
    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
    so your explanation is very helpful

    My mistake your right! Had a black out there!

    Material Price & Usage!
    Labour Efficiency & Rate!

    Marginal Costing: Fixed OH Expenditure Variance.

    etc etc etc!


    Ill Change my above post thanks for flagging that Sandy!
Privacy Policy