Concept explainers
Concept introduction:
Direct material variances:
Direct material variances refer to the difference between the standard direct material cost and actual direct material cost incurred. Direct material cost variances are categorized into following two categories:
- Direct material Rate variance: this variance shows the difference of standard rate and actual rate of material. The formula to calculate this variance is as follows:
- Direct material usage variance: this variance shows the difference of standard usage and actual usage of material. The formula to calculate this variance is as follows:
- Direct material cost or spending variance: this variance shows the difference of
standard cost and actual cost of material. The formula to calculate this variance is as follows:
To indicate:
The journal entry for Direct Material Cost and related variances.
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GEN COMBO LOOSE LEAF FOR MANAGERIAL ACCOUNTING; CONNECT ACCESS CARD
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