[redox1100]

I just want to confirm the following

Direct material usage variance can also be referred to as

1. Direct material quantity variance

2. Direct material efficiency variance or

3. Direct material volume variance

If someone could confirm this or correct this statement, I’d greatly appreciate it.

Thanks in advance

[kevlee]

theres only direct material price variance and direct usage variance and those are two different components that make up the total direct material variance.

you might be getting confused with quantity and efficiency with the direct labor or overhead terms? BEC is a bit fuzzy for me as i dont recall.

[redox1100]

ok i should have done more research before posting

I got this from accounting4management.com (hopefully this is a reliable website):

“Direct materials quantity variance is also known as Direct materials efficiency variance and Direct materials usage variance. It measures the difference between the quantity of materials used in production and the quantity that should have been used according to the standard that has been set. Although the variance is concerned with the physical usage of materials, it is generally stated in dollar terms to help gauge its importance”

The main reason i asked this question is because according to Becker, Sales Variance can be divided into sales price variance and sales volume variance. It then goes on to say that volume variance can further be divided into sales quantity variance and sales mix ratio variance. So as you see when it comes to variance regarding sales, sales volume variance does not equal sales quantity variance. However, when dealing with a cost variance, cost volume variance does equal cost quantity variance. Am I looking too much into this or do others see where I am coming from? To hell with variances….

please clarify!

Thanks

[redox1100]

kevlee according to what i found as posted above, they seem to be equivalent.

[Anonymous]

Redox: BEC is far from fuzzy for me, as I'm taking it in less than a week. Your accurate in your assumptions. They refer to the DM Usage Variance as DM efficiency and also as DM Volume. All of the terms are synonymous.

The overhead variances are sometimes referred to as production volume variance (For the overhead volume variance). That one trips me up quite often. If your not using Becker they have a really useful nmeumonic to remember the variance analysis by and it goes like this:

P: DM Price

U: DM Usage (efficiency, volume)

R: DL Rate (also price)

E: DL Efficiency (Also usage, volume)

To remember what to multiply by you would use the phrase “Dads Dads” Where D- Difference A- Actual S- Standard. Your difference is always, ALWAYS going to be Standard- Actual. So if you have a negative number after computing the formula… its an unfavorable and vice versa.

P: Difference x Actual

U: Difference x Standard

R: Difference x Actual

E: Difference x Standard

I hope this clears up some things for you.

[Anonymous]

To be more specific about the production volume variance. It is an overhead variance composed of the budgeted fixed and variable overhead based on standard hours/quantity allowed and the fixed and variable overhead actually applied. CPA-03831 question is a good example.

[Anonymous]

bcjasper09:

What materials did you use to study? Your scores are insane-almost impossible!!! Is Wiley sufficient for BEC section?

Thanks a lot!

[Author]

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