Home › CA Inter › Cost and Management Accounting › Standard Costing › Material cost variance can be split into
Material cost variance can be split into
Arate variance and efficiency variance
Bvolume variance and calendar variance
Cusage variance and price variance
Dmix variance and rate variance
Answer & Solution
Correct answer: C. usage variance and price variance
1. Material cost variance answers why total material cost differed from standard.
2. Two things can differ: the price paid and the quantity used.
3. So material cost variance = material usage variance plus material price variance.
4. Rate and efficiency variances are the labour equivalents, not material ones.
_Source: ICAI Cost and Management Accounting Ch13 'Standard Costing', section 13.7.1_
Related questions
Standard costing is most useful for control because standards are setLabour efficiency variance measures the effect of a difference inWhen material purchased is not stated in a question, actual quantity for the price variancStandard quantity 500 kg at 20 per kg, actual 520 kg at 20 per kg. The material usage variAn adverse material price variance is generally the responsibility of theMaterial price variance is measured asMaterial cost variance isStandard costing aids in inventory valuation because: