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Standard costing
Material variances
4.1 Calculations
Where purchases = issues and/or the price variance is calculated at the time of
issue:
Actual Quantity × Actual Price
Price variance
Actual Quantity × Standard Price Total variance
Usage variance
Standard Quantity × Standard Price
If there is a change in materials inventory in the year, then the price variance is
based on the quantity of material purchased whilst the usage variance is based on
the actual quantity used.
Illustrations and further practice
Now try TYU question 4 from Chapter 15.
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