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Materials Quantity Variance or Materials Usage Variance:

Learning objectives of this article:

  1. Define and explain materials quantity/usage variance.

  2. How is it calculated?

  3. What are the reasons of unfavorable materials quantity variance (excessive usage of materials in production)?

  4. Who is is responsible for this variance?

Definition and Explanation:

Materials quantity variance is computed by comparing the actual quantity of materials used with the standard quantity of material allowed, both priced at standard cost. If actual quantity used is more than the standard quantity allowed to produce a particular number of units, the variance is called unfavorable materials quantity variance. An if actual quantity of materials used is less than the standard quantity allowed, the variance is called favorable materials quantity variance.

The standard quantity allowed is determined by multiplying the quantity of materials that should be required to produce one unit (the standard quantity per unit) times the actual number of units produced during the period. The unit produced are the equivalent units of production for the materials cost being analyzed.


The following formula is used to calculate this variance:

Materials quantity variance = (Actual quantity used Standard price) - (Standard quantity allowed Standard price)


Assume that 3,550 pieces of item 5-489 (direct material) are used in producing 1,750 units of finished product. Standard quantity allowed to produce 1 unit of finished product is 2 pieces of item 5-489 and standard price per piece of 1 piece is $2.50.

Required: Calculate Direct materials quantity variance.



Unit Cost = Amount
Actual quantity used at standard price 3,550   $2.50 standard   $8,875
Standard quantity allowed at standard price 3,500   $2.50 standard   8,750
  50       $(125) unfav.

The standard quantity allowed is the result of multiplying 1,750 units of finished product by the standard quantity of 2 pieces per unit. The $125 materials quantity (or usage) variance is unfavorable because the actual quantity used exceeded  the standard quantity by 50 pieces of direct materials (item 5-489).

Excessive usage of materials can result from many reasons, including faulty machines, inferior quality of materials, untrained workers, poor supervision and theft of materials.

Who is Responsible for Direct Materials Quantity Variance?

Generally, production department is responsible to see that material usage is kept in line with standards. However, purchasing department may be responsible for unfavorable materials quantity variance if it is caused by poor quality of materials. If purchasing department obtains inferior quality materials in effort to economize on price, the materials may be unsuitable for use and may result in excessive waste. Thus purchasing department rather than production department would be responsible for the quantity or usage variance.

A word of caution is in order. Variance analysis should not be used as an excuse to conduct witch hunts or as a means of beating line managers and workers over the head. The emphasize must be on control in the sense of supporting the line managers and assisting them in meeting the goals that they have participated in setting for the company. In short, the emphasize should be positive rather than negative. Excessive dwelling on what has already have happened, particularly in terms of trying to find someone to blame, can destroy morale and kill any cooperative spirit.

Relevant Articles:

Definition and Explanation of Standard Cost
Purposes and Advantages of Standard Costing System
Setting Standards
Materials Price Standard
Materials Price Variance
Materials Quantity Standard
Materials Quantity Variance
Direct Labor Rate Standard
Direct Labor Rate Variance
Direct Labor Efficiency Standard
Direct Labor Efficiency Variance
Factory Overhead Cost Standards
Overall or Net Factory Overhead Variance
Overhead Controllable Variance
Overhead Volume Variance
Overhead Spending Variance
Overhead Idle Capacity Variance
Overhead Efficiency Variance
Variable Overhead Efficiency Variance

Fixed Overhead Efficiency Variance

Mix and Yield Variance
Variance Analysis Example
Standard Costing and Variance Analysis Formulas
Management by Exception and Variance Analysis
International Uses of Standard Costing System
Advantages, Disadvantages, and Limitations of Standard Costing




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