Direct materials quantity variance is a part of the overall materials cost variance that occurs due to the difference between the actual quantity of direct materials used and the standard quantity allowed for the output. Direct materials quantity variance is also known as direct material usage or volume variance. It indicates whether or not the material has been properly utilized. A favorable materials quantity variance indicates savings in the use of direct materials. An unfavorable variance, on the other hand, indicates that the amount of materials used exceeds the standard requirement. The Blue Sky Company provides the following data for the month of June 2016: Required: Calculate the direct materials quantity variance for Blue Sky Company. Indicate whether it is favorable or unfavorable. The direct materials quantity variance of Blue Sky Company, as calculated above, is favorable because the actual quantity of materials used is less than the standard quantity allowed.Direct Materials Quantity Variance: Definition
Formula For Direct Materials Quantity Variance
Example: How to Calculate Direct Materials Quantity Variance
Solution
Direct Material Quantity Variance FAQs
The direct materials quantity variance can be calculated as follows: Quantity of Direct Materials Used (4,000 units) – Standard Quantity Allowed (4,200 units) = Direct Material Quantity Variance (200 units unfavorable)
If a company's actual quantity used exceeds the standard allowed, then the direct materials quantity variance will be unfavorable. This means that the company has utilized more materials than expected and may have paid extra in materials cost.
In a multi-product company, the total quantity variance is divided over each of the products manufactured. This will result in a product usage variance for each unit produced.
Standard direct material usage refers to the amount of materials allowed to be used per unit produced. It may also refer to the amount expected under normal circumstances.
A direct materials price variance can be calculated as follows: Actual Direct Materials Price (per unit) – Standard Direct Materials Price (per unit) = Direct Materials Price Variance (Unfavorable or Favorable)
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
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