In one sentenceThe effect of using more or less material than the standard quantity required for actual production, valued at the standard price.
Simply put
First you calculate how much material you should have used for the quantity you actually produced, not for the planned quantity. Then you compare it with what you used.
The difference is valued at the standard price so it does not mix with the price variance. Extra usage is unfavorable, and its usual causes are waste, spoilage, poor material quality and operating errors.
Worked example
A confectionery factory produced 1,000 boxes; the standard is 2 kilos of sugar per box at 10 SAR, and it actually used 2,100 kilos.
Standard quantity for actual production1,000 × 2 = 2,000 kg
Actual quantity − Standard quantity2,100 − 2,000 = 100 kg
× Standard price100 × 10
Material quantity variance (unfavorable)1,000 SAR
Formula: (Actual quantity used − Standard quantity for actual production) × Standard price
Don't confuse it with
Material price varianceIt measures the effect of buying at a different price, and is usually the responsibility of purchasing.
in FullScreen ERP
Difference reports in the Stocktaking app show surpluses and shortages by quantity and by goods value. Stocktaking app