Material Cost Variance | Variance Analysis | Standard Costing
Material cost variance (MCV) is the sum of material usage variance and price variance. In other words, it is the difference between the actual output between the actual cost of Direct material used and the standard cost of direct material specified for the actual output achieved.
MCV is caused by the combined effect of usage and price performance. It is the total effect of all segments of the material variances.
Material Cost Variance Formula
= (SQ *SP)-(AQ*AP) + Price Variance on Stock
- SQ = Standard Quantity for Actual Output
- SP = Standard Price
- AQ = Actual Quantity
- AP = Actual Price