Direct material total variance

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In variance analysis (accounting) direct material total variance^[1] is the difference between the actual cost of actual number of units produced and its budgeted cost in terms of material. Direct material total variance can be divided into two components:

• the direct material price variance,
• the direct material usage variance.

Let us assume that standard direct material cost of widget is as follows:

2 kg of unobtainium at $ 60 per kg ( = $ 120 per unit).

Let us assume further that during the given period, 100 widgets were manufactured, using 212 kg of unobtainium which cost $ 13,144.

Under those assumptions direct material total variance can be calculated as:

Direct material total variance can be reconciled to direct material price variance and direct material usage variance by:

See direct material usage variance#Example and direct material price variance#Example for computations of both components.

• Variance analysis (accounting)
• Direct material price variance
• Direct material usage variance

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