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This video shows how to calculate the materials quantity variance, which is also known as the materials yield variance.
The materials quantity variance is the difference between:
(1) actual quantity purchased * standard purchase price
and
(2) standard quantity purchased * standard purchase price
This is sometimes abbreviated as: (AQ * SP) - (SQ * SP)
If the company has used more material than it should have (according to the standard, which is set by management), then the materials quantity variance is unfavorable. If the variance is large enough you should speak with the materials manager to identify the source of the problem (perhaps the company is using low-quality materials with a high rate of defects, the company is wasting too material, etc.).—
Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education freely a…...more
This video shows how to calculate the materials quantity variance, which is also known as the materials yield variance.
The materials quantity variance is the difference between:
(1) actual quantity purchased * standard purchase price
and
(2) standard quantity purchased * standard purchase price
This is sometimes abbreviated as: (AQ * SP) - (SQ * SP)
If the company has used more material than it should have (according to the standard, which is set by management), then the materials quantity variance is unfavorable. If the variance is large enough you should speak with the materials manager to identify the source of the problem (perhaps the company is using low-quality materials with a high rate of defects, the company is wasting too material, etc.).—
Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education freely available to the world.
—
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