Material Variances Homework Help
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What is Material Variance?
Variance has been provided with the definition of being a difference in the actual cost and budgeted cost of anything. If we see these parameters in terms of cost of materials then the difference generated in between actual material cost and budgeted material cost is called as material variance. In this Material variances homework help article, we talk about its definition from various perspectives and the reasons of these variance.
Type of Material Variance
Depending upon the size of variance and direct material, this article for Material variances homework help provides two types of material variances.
Direct material cost variance: the standard cost of direct material that is achieved at the end of production is compared with the same specified for production in direct material cost variance. the changes in quantities of the material can rise the variance and as per our Material variances homework help article that can be done in two components.
i. Material price variance: the price being different to standards gives a comparison difference. This is called as material price variance.
ii. Material usage variance: the difference by comparing the actual usage and expected usage of the material after multiplying with standard cost is called as material usage variance.
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Reasons of Occurrence of Material Price Variance
Material price variance occur as per our Material variances homework help article due to the following reasons.
a. Price fluctuations in material market
b. Nonstandard lot purchase
c. Losses due to transit and shrinkage
d. Unfavourable terms by the supplier
e. Fraud purchases.
f. unavailability of planned materials and lack of substitute material.
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