
Concept explainers
Concept Introduction:
Material Cost Variance: The difference between the
• Actual price of the material varies from the standard price and/or
• Actual quantity of material used varies from the standard quantity.
Therefore, Material Cost Variance is the sum of (i) Material Price Variance and (ii) Material Quantity Variance.
The following formulas are used to calculate Material Cost Variance:
Material Cost Variance(MCV) = Material Price Variance(MPV) + Material Quantity Variance(MQV)
Also Material Cost Variance (MCV) = Standard Cost – Actual Cost
Material Cost Variance gives a view of deviations from the set standards which can be either favorable or unfavorable
To determine: The Actual Total Direct Material Cost

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Chapter 23 Solutions
Fundamental Accounting Principles
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