Material Cost Variance – Variance Analysis | Standard Costing

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

where,

• SQ = Standard Quantity for Actual Output
• SP = Standard Price
• AQ = Actual Quantity 
• AP  = Actual Price

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Smirti

BBA- Finance Specialization
MBA- Finance Specialization

I am Smirti Bam, an enthusiastic edu blogger with a passion for sharing insights into the dynamic world of business and management through this website.

I hold a MBA degree from Presidential Business School, Kathmandu, and a BBA degree with a specialization in Finance from Apex College,

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