The main reason for actual and estimated costs being different are either a change in the price of materials or a change in the usage of material.
Materials price variance is the difference in cost that results from the price being different to the standard. ( Standard price – Actual price ) x Actual material usage
Materials usage variance is the difference between the actual usage of material and the standard usage multiplied by the standard price. ( Actual usage – Standard usage ) x Standard price
Total material variance = Actual Material cost – Standard Material cost
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