What is the formula for the total direct materials variance in standard costing?

What is the formula for the total direct materials variance in standard costing?

• A. Actual cost minus standard cost
• B. Standard cost minus actual cost
• C. Actual quantity times actual price minus standard quantity times standard price
• D. Standard quantity times standard price minus actual cost

Answer: (A)

Direct materials total variance shows how much was actually spent on materials versus how much should have been spent for the actual production. It is calculated as the actual cost of direct materials minus the standard cost allowance for the actual output. The standard cost allowance is the standard quantity times the standard price. So the formula is: Actual cost minus (Standard quantity × Standard price). If this value is positive, spending was higher than planned (adverse); if negative, spending was lower (favorable). Note that actual cost can also be written as actual quantity times actual price, so that expression would be the same as the difference between actual cost and standard cost.

Direct materials total variance shows how much was actually spent on materials versus how much should have been spent for the actual production. It is calculated as the actual cost of direct materials minus the standard cost allowance for the actual output. The standard cost allowance is the standard quantity times the standard price. So the formula is: Actual cost minus (Standard quantity × Standard price). If this value is positive, spending was higher than planned (adverse); if negative, spending was lower (favorable). Note that actual cost can also be written as actual quantity times actual price, so that expression would be the same as the difference between actual cost and standard cost.