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Material Cost Variance Formula

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Material Cost Variance assesses the difference between the actual cost of materials used in production and the standard cost of materials that should have been used for the actual production output. Check FAQs

MCV = (SQAO \cdot STP) - (ACQ \cdot ACP)

MCV - Material Cost Variance?SQAO - Standard Quality for Actual Output?STP - Standard Price?ACQ - Actual Quantity?ACP - Actual Price?

Material Cost Variance Example

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With units

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Here is how the Material Cost Variance equation looks like with Values.

Here is how the Material Cost Variance equation looks like with Units.

Here is how the Material Cost Variance equation looks like.

356725 = (425 \cdot 855) - (95 \cdot 70)

356725 = (425 \cdot 855) - (95 \cdot 70)

356725 = (425 \cdot 855) - (95 \cdot 70)

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Material Cost Variance Solution

Follow our step by step solution on how to calculate Material Cost Variance?

FIRST Step Consider the formula

MCV = (SQAO \cdot STP) - (ACQ \cdot ACP)

Next Step Substitute values of Variables

∴

MCV = (425 \cdot 855) - (95 \cdot 70)

Next Step Prepare to Evaluate

∴

MCV = (425 \cdot 855) - (95 \cdot 70)

LAST Step Evaluate

∴

MCV = 356725

Material Cost Variance Formula Elements

Variables

Material Cost Variance

Material Cost Variance assesses the difference between the actual cost of materials used in production and the standard cost of materials that should have been used for the actual production output.

Symbol: MCV

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Material Cost Variance

Standard Quality for Actual Output

Standard Quality for Actual Output refers to the predetermined or expected quality level of the goods or services produced, based on established standards or specifications.

Symbol: SQAO

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Standard Quality for Actual Output

Standard Price

Standard Price refers to the predetermined cost per unit of a particular material based on factors such as historical data, market prices, negotiated contracts, or internal cost estimates.

Symbol: STP

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Standard Price

Actual Quantity

Actual Quantity refers to the real amount or volume of a specific item, material, product, or resource used, consumed, produced, or acquired within a certain timeframe.

Symbol: ACQ

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Actual Quantity

Actual Price

Actual Price refers to the real cost per unit of a specific item, material, product, or resource that has been incurred within a certain timeframe.

Symbol: ACP

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Actual Price

Other formulas in Cost Accounting category

Go Material Price Variance

MPRV = ACQ \cdot (STP - ACP)

Go Material Quantity

MQ = STP \cdot (SQ - ACQ)

Go Revised Standard Quantity

RSTQ = (\frac{SQM}{TSQ}) \cdot TAQ

Go Material Usage Variance

MUV = STP \cdot (AQU - SQ)

How to Evaluate Material Cost Variance?

Material Cost Variance evaluator uses Material Cost Variance = (Standard Quality for Actual Output*Standard Price)-(Actual Quantity*Actual Price) to evaluate the Material Cost Variance, Material Cost Variance is a term used in cost accounting and financial analysis to measure the difference between the actual cost of materials used in production and the standard cost of those materials. Material Cost Variance is denoted by MCV symbol.

How to evaluate Material Cost Variance using this online evaluator? To use this online evaluator for Material Cost Variance, enter Standard Quality for Actual Output (SQAO), Standard Price (STP), Actual Quantity (ACQ) & Actual Price (ACP) and hit the calculate button.

FAQs on Material Cost Variance

What is the formula to find Material Cost Variance?

The formula of Material Cost Variance is expressed as Material Cost Variance = (Standard Quality for Actual Output*Standard Price)-(Actual Quantity*Actual Price). Here is an example- 356725 = (425*855)-(95*70).

How to calculate Material Cost Variance?

With Standard Quality for Actual Output (SQAO), Standard Price (STP), Actual Quantity (ACQ) & Actual Price (ACP) we can find Material Cost Variance using the formula - Material Cost Variance = (Standard Quality for Actual Output*Standard Price)-(Actual Quantity*Actual Price).

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Material Cost Variance Formula

Material Cost Variance Example

Material Cost Variance Solution

Material Cost Variance Formula Elements

Other formulas in Cost Accounting category

How to Evaluate Material Cost Variance?

FAQs on Material Cost Variance

Variable Name