What is a Material Quantity Variance?A material quantity variance is the difference between the actual amount of materials used in the production process and the amount that was expected to be used. The measurement is employed to determine the efficiency of a production process in converting raw materials into finished goods. If there is a material quantity variance, one or more of the following is usually the cause: Show
How to Calculate the Material Quantity VarianceThe formula for the material quantity variance is the actual usage in units minus the standard usage in units, multiplied by the standard cost per unit, or: (Actual usage in units - Standard usage in units) x Standard cost per unit Understanding the Material Quantity VarianceThe material quantity variance can yield unusual results, since it is based on a standard unit quantity that may not be even close to actual usage. The material quantity is usually set by the engineering department, and is based on an expected amount of material that should theoretically be used in the production process, along with an allowance for a reasonable amount of scrap. If the standard is excessively generous, there will be a long series of favorable material quantity variances, even though the production staff may not be doing an especially good job. Conversely, a parsimonious standard allows little room for error, so there is more likely to be a considerable number of unfavorable variances over time. Thus, the standard used to derive the variance is more likely to cause a favorable or unfavorable variance than any actions taken by the production staff. Of course, variances can be caused by production snafus, such as an excessive amount of scrap while setting up a production run, or perhaps damage caused by mishandling. It can even be caused by the purchasing department ordering materials that have an excessively low quality, so that more material is scrapped during the production process. The material quantity variance is a subset of the quantity variance, since it only applies to materials (or, more accurately, direct materials) that are used in the production process. Example of the Material Quantity VarianceABC International expects to use 100 pounds of plastic resin to make a batch of plastic cups, but instead uses 120 pounds. The standard cost of the resin is $5 per pound. Therefore, the material quantity variance is: (120 pounds actual usage - 100 pounds standard usage) x $5 per pound = $100 Material quantity variance Note: In rare cases, the material quantity variance can be used to track the usage of marketing materials during sales campaigns, where actual usage is compared to the expected total amount of usage. This situation usually applies only when the cost of marketing materials is quite high. Terms Similar to Material Quantity VarianceThe material quantity variance is also known as the material usage variance and the material yield variance. Answer :Answer: Procurement Department Nội dung chính Show
Explanation: Unfavorable or Adverse Variance means that actual cost is greater than standard cost. For price the procurement department is responsible for purchasing on behalf of the firm, so they are charged with the responsibility of purchasing products with the least price without compromising quality. If they have purchased wrongly and they end up paying more that what was budgeted for then that’s unfavorable. sadddamkashmiri801 sadddamkashmiri801 Available options are: A. Production. B. Materials Handling. C. Engineering. D. Purchasing. Answer: D. Purchasing Explanation: The reason is that the price variance is because of the fact that the purchasing department didn't assessed the market conditions and as a result lost a great opportuntity to purchase the material at low price. Their might be other factors which are as under:
New questions in Business5.The purchasing manager will generally have responsibility for materials pricevariance because they have control over the price paid for goods. However,someone other than purchasing manager could be responsible for a materialsprice variance. Production supervisors are generally responsible for labor ratevariance because labor rate variances generally arise as a result of how labor isused. The production department generally has responsibility for materialsquantity variance because they see that material usage is kept in line withstandards. However, sometimes the purchasing department may be responsiblefor an unfavorable materials quantity variance.6.The materials price variance can be computed either at the time of purchase ofdirect materials or at the time when the direct materials are used. Mostcompanies compute the materials price variance when materials are purchasedrather than when they are used in production. There are two reasons for thispractice. First, delaying the computation of the price variance until the materialsare used would result in less timely variance reports. Second, computing theprice variance when the materials are purchased allows materials to be carried inthe inventory accounts at their standard cost, which greatly simplifiesbookkeeping. 35.Which department is usually held responsible for an unfavourable materials quantityvariance?A)Marketing.B)Purchasing.C)Engineering.D)Production.Ans: DDifficulty: Easy 36.A favourable materials price variance coupled with an unfavourable materials usagevariance would MOST likely result from which of the following?Difficulty: Easy Get answer to your question and much more 37.Tower Company planned to produce 3,000 units of its single product, Titactium, duringNovember. The standards for one unit of Titactium specify six kilograms of materials at$0.30 per kilogram. Actual production in November was 3,100 units of Titactium. Therewas a favourable materials price variance of $380 and an unfavourable materials quantityvariance of $120. Based on these variances, what could one assume?Difficulty: Medium Get answer to your question and much more 38.A labour efficiency variance resulting from the use of poor quality materials should becharged to which/whom?Difficulty: Medium Get answer to your question and much more Which of the following statements is true? An unfavorable materials price variance could have resulted from actions taken by the purchasing agent. An unfavorable materials usage variance could have resulted from actions taken by the production supervisor. An unfavorable labor usage variance could have resulted from actions taken by the personnel department. All of the above answers are correct. Which department typically is responsible for an Unfavourable materials price variance?4. In general, the purchasing agent is responsible for the material price variance. Who is responsible for material price variance?Answer: The Purchasing Agent. Which department is held responsible for an unfavorable materials usage variance?price variance. Which department should usually be held responsible for an unfavorable materials price variance? Purchasing. What department is responsible for variance?Answer and Explanation: Labor variance can be defined as where actuals cost of production is different from the labor cost that had been budgeted for. The human resource department is responsible for labor rate variance because it is the one that is concerned with the hiring and training of employees. Who is responsible for material variances?The production department, and specifically the production manager is therefore held responsible for the material usage variance.
Which department should usually be held responsible for an unfavorable?The purchasing department should ordinarily be held responsible for an unfavorable materials price variance because that department ordinarily has most control over the price.
Which department of a manufacturer is usually responsible for a materials price variance?Purchasing department, meanwhile, is accountable for any Direct Materials variance since it is responsible for buying the raw material supplies needed for production.
Who is responsible accountable for material price variance?The materials price variance is usually the responsibility of the purchasing manager . The materials quantity and labor efficiency variances are usually the responsibility of production managers and supervisors . 6.
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What department is usually responsible for an unfavorable material quantity variance?
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