📊Variance Analysis
Direct Materials Price Variance
(Actual Price - Standard Price) × Actual Quantity Purchased = DM Price Variance
What It Means
Difference due to material prices.
Example
Actual Price:$5.50
Standard Price:$5.00
Actual Quantity:10,000 units
($5.50 - $5.00) × 10,000
DM Price Variance = $5,000 Unfavorable
→ Paid $0.50 more per unit than planned
Related Formulas
Price Variance (Materials or Labor)
(Actual Price - Standard Price) × Actual Quantity = Price Variance
Quantity Variance (Materials or Labor)
(Actual Quantity - Standard Quantity) × Standard Price = Quantity Variance
Direct Materials Quantity Variance
(Actual Qty Used - Standard Qty Allowed) × Standard Price = DM Quantity Variance
Direct Labor Rate Variance
(Actual Rate - Standard Rate) × Actual Hours = DL Rate Variance
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