67. Distinguish Between Direct Material Price Variance And Direct Material Usage Variance?
Direct Material Price Variance: It is that portion of the direct material cost variance which is due to the difference between the standard price specified and the actual price paid. Mathematically: DMPV = Actual Quantity x (Standard price- Actual price) If the actual price is more than the standard price, the variance would be adverse and vice versa. Direct Material Usage or Quantity Variance: It is caused due to the difference between the standard quantity specified (for the output achieved) and the actual quantity used.
