How to split a materials variance into price and usage
A materials variance has two causes: a different price, and a different amount used. Split one into the two and see what each one says.
Task 1The standard for one candle2 questions
A standard cost is what one unit should cost. It sets how much material the unit should use, and the price that material should cost.
Larkfield's standard for the wax in one candle is 0.5 kg at £4 a kg.
The standard quantity for the actual output is the units made, times the standard quantity for one unit. It is what the month's output should have used.
In September Larkfield made 2,200 candles.
Task 2The price variance2 questions
You work out a figure and pick the right answer.
Task 3The usage variance3 questions
You work out a figure and sort items into the right place.