Material Usage Variance | Variance Analysis | Standard Costing
Material Usage variance (MUV) is the difference between standard quantity in the production and actual quantity consumed in the production. During the production process, if the raw materials used in the production differs from the standard quantities that have been used to produce the output then this will result in MUV.
MUV is the deviation of the ratio of actual quantity of materials consumed for the actual output from the standard quantity of materials to be consumed for the actual output. The deviation is of this quantity is to be multiplied by the standard price to convert the quantity into monetary value. MUV is favorable when the actual quantity of direct materials used is less than the total standard quantity allowed for the actual output.
Material Usage Variance Formula
- SQ = Standard Quantity
- SP = Standard Price
- AQ = Actual Quantity