Direct Materials Quantity Variance: Definition
Direct materials quantity variance is a part of the overall materials cost variance that occurs due to the difference between the actual quantity of direct materials used and the standard quantity allowed for the output.
Direct materials quantity variance is also known as direct material usage or volume variance. It indicates whether or not the material has been properly utilized.
A favorable materials quantity variance indicates savings in the use of direct materials. An unfavorable variance, on the other hand, indicates that the amount of materials used exceeds the standard requirement.
ْFormula For Direct Materials Quantity Variance
Example: How to Calculate Direct Materials Quantity Variance
The Blue Sky Company provides the following data for the month of June 2016:
- Direct materials used: 4,000 units
- Standard quantity allowed: 4,200 units
- Standard price per unit of direct materials: $5
Required: Calculate the direct materials quantity variance for Blue Sky Company. Indicate whether it is favorable or unfavorable.
Solution
The direct materials quantity variance of Blue Sky Company, as calculated above, is favorable because the actual quantity of materials used is less than the standard quantity allowed.